Episode

FBT Power Plays: The Boss-Level Guide to Salary Packaging

We've spent two weeks talking about audits, penalties, and 47% tax bills. Now it's time for the payoff. Join Mia, Leo, and Harvey Green for the grand finale of our FBT series as we uncover the specific exemptions that let you give your staff laptops, electric vehicles, and gifts completely tax-free.

Frequently Asked Questions

Q: What is the Section 58X work-related items exemption? A: Section 58X is a provision in the FBT legislation that provides a complete exemption for certain portable electronic devices provided to employees primarily for work use. This includes laptops, tablets, iPads, mobile phones, GPS units, and electronic diaries. If the device is used predominantly for employment purposes, the employer pays zero FBT, can claim the GST credit, and can claim a tax deduction for the cost. Q: Is there a limit on how many devices a small business can provide under the Section 58X exemption? A: For large corporate employers, the exemption is generally limited to one item per employee per FBT year for items with a substantially identical function. However, if you are a small business entity with an aggregated turnover under $50 million, this restriction does not apply. You can provide an employee with a laptop, an iPad, and a mobile phone in the same FBT year, and all three can qualify for the exemption, provided they are primarily for work use. Q: How does the FBT exemption for electric vehicles work? A: The Australian Government provides a full FBT exemption for eligible electric vehicles (EVs) and plug-in hybrid electric vehicles (PHEVs) that are below the luxury car tax threshold for fuel-efficient vehicles, which is approximately $91,000 for the 2025-26 financial year. The exemption applies to the vehicle itself as well as associated running costs paid by the employer, including registration, insurance, repairs, maintenance, and electricity charging costs. This makes providing an EV to an employee significantly more tax-effective than a traditional petrol or diesel vehicle. Q: How does salary packaging an electric vehicle benefit the employee? A: Under a salary packaging arrangement, the employee agrees to reduce their pre-tax salary by the amount of the lease payment and running costs. Because the reduction comes from pre-tax income, the impact on their take-home pay is significantly less than the cost of the vehicle. For example, a $1,500 monthly lease might only reduce the employee's take-home pay by $800 to $900 per month. The employee gets the use of a new electric vehicle for a fraction of the after-tax cost of leasing or purchasing it personally. Q: Does the electric vehicle FBT exemption affect the employee's Reportable Fringe Benefits amount? A: Yes. Even though the employer pays zero FBT on the electric vehicle, the grossed-up taxable value of the benefit is still recorded on the employee's income statement as a Reportable Fringe Benefit. This amount—typically in the range of $15,000 to $20,000 per year—is added to the employee's adjusted taxable income for the purposes of calculating HECS/HELP repayments, child support obligations, Medicare Levy Surcharge liability, and eligibility for certain government benefits. Employees with HECS debts should model this impact carefully before entering a salary packaging arrangement. Q: What is the difference between entertainment and non-entertainment gifts for FBT purposes? A: Entertainment generally involves the provision of food, drink, or recreation, such as taking staff to a restaurant, the movies, or a sporting event. Non-entertainment gifts include items like hampers, gift vouchers, flowers, bottles of wine, or other tangible goods. The distinction is critical because non-entertainment gifts under $300 per person are exempt from FBT and remain tax-deductible, whereas entertainment under $300 is exempt from FBT but not tax-deductible. A $200 hamper is therefore more tax-efficient than a $200 dinner. Q: What are the salary packaging caps for public hospital and charity employees? A: Employees of public hospitals and public ambulance services can salary package up to $9,010 of their living expenses (such as rent or mortgage payments) tax-free each FBT year. Employees of registered charities and public benevolent institutions (PBIs) can package up to $15,900 of living expenses tax-free. In addition to the general cap, these employees are also entitled to a separate meal entertainment cap of approximately $2,650 per year, which can be accessed via a dedicated dining or entertainment card. Q: What relocation expenses are exempt from FBT when hiring a new employee? A: If an employer hires a new employee who is required to relocate their usual place of residence to take up the position, the employer can pay for certain relocation costs without triggering FBT. Exempt expenses include the cost of removalists, flights and travel for the employee and their immediate family, connection or reconnection of utilities at the new residence, and a limited period of temporary accommodation while the employee secures permanent housing. This exemption is a powerful tool for attracting talent from interstate or overseas without incurring a 47% tax penalty. Q: Why is a relocation package often better than offering a higher salary? A: A higher salary is subject to income tax at the employee's marginal rate (up to 47%), meaning a significant portion of the increase goes to the ATO rather than the employee. Relocation expenses paid directly by the employer under the FBT exemption are provided tax-free. The employee receives the full value of the benefit without any reduction to their take-home pay. For employers competing for scarce talent, a tax-free relocation package can be more attractive to candidates than an equivalent gross salary increase. Q: Can I provide multiple exempt benefits to the same employee in a single year? A: Yes, provided each benefit meets its own specific exemption criteria. A small business could provide an employee with a laptop under Section 58X, an electric vehicle under the EV exemption, a $250 Christmas hamper under the minor benefits exemption, and a relocation package upon hiring, all within the same FBT year and all entirely free of FBT. The key is understanding and documenting the specific conditions attached to each exemption and ensuring the arrangements are structured correctly from the outset.

Read the transcript

CORRECTION NOTICE, updated 22 September 2026 Most of this episode holds up. Section 58X is real, the small business concession is real, the gift rules and the entertainment versus non-entertainment split are right, and the salary packaging caps are the correct amounts. But the electric vehicle section has aged badly since recording, the laptop arithmetic is out, and several figures need tightening. The audio cannot be changed, so the corrections are marked inline below. Where the recording and this page disagree, this page is right. 1. PLUG-IN HYBRIDS NO LONGER QUALIFY FOR THE ELECTRIC CAR EXEMPTION. From 1 April 2025 a plug-in hybrid is not a zero or low emissions vehicle for FBT purposes. Only battery electric and hydrogen fuel cell cars qualify. A plug-in hybrid keeps the exemption only if it was used, or available for use, before 1 April 2025 and there is a financially binding commitment to keep providing it, and that protection ends the moment the commitment is changed, extended or renovated. 2. THE THRESHOLD IS A MOVING NUMBER. It is the luxury car tax threshold for fuel-efficient vehicles, $91,387 for 2025-26 and $91,661 for 2026-27, and it is tested against the car's value the first time the car is both held and used, not against what it is worth later. 3. THE EXEMPTION IS BEING PHASED DOWN. An exposure draft, Treasury Laws Amendment Bill 2026: Phased Changes to the FBT Electric Car Exemption, was released on 17 September 2026 with consultation closing 28 September 2026. As drafted, cars at or under $75,000 keep the full exemption until 31 March 2029; cars above $75,000 and under the fuel-efficient limit drop to a 25 per cent FBT discount from 1 April 2027; and from 1 April 2029 every eligible car is on the 25 per cent discount. Existing leases are intended to be grandfathered. None of this is law yet, but it changes the maths for anyone signing after 1 April 2027. 4. THE LAPTOP EXAMPLE UNDERSTATES THE COST. The GST credit on a $3,000 GST-inclusive laptop is one-eleventh, $272.73, not $270. And the $1,900 net cost assumes a 30 per cent company tax rate. A business with turnover under $50 million is a base rate entity on 25 per cent, which makes the net cost about $2,045. The point of the comparison survives: $2,045 against $4,500 of salary is still a large win, and a $3,000 laptop is under the $20,000 instant asset write-off for businesses with turnover under $10 million, so the deduction is immediate. 5. THE ONE-ITEM LIMIT IS NARROWER THAN DESCRIBED. It applies to items with substantially identical functions, so any employer can already give an employee a laptop and a phone. The small business concession is what allows a second device doing substantially the same job. From 1 April 2027 the limit is removed for all employers, but the exemption is withdrawn for these items where they are provided under a salary sacrifice arrangement, which is the opposite direction to the one this episode points in. 6. THE PACKAGING CAPS ARE RIGHT BUT THE LABEL IS WRONG. $9,010 and $15,900 are the amounts of pre-tax salary you can package. The ATO publishes the caps grossed up: $17,000 for public hospitals and public ambulance services, $30,000 for public benevolent institutions and health promotion charities, and $5,000 for salary packaged meal entertainment, which is the $2,650. Divide by the type 2 rate of 1.8868 to move between the two. And not every charity gets the $15,900: a registered charity that is not a public benevolent institution or a health promotion charity is a rebatable employer, which is a 47 per cent rebate capped at $30,000 grossed up. 7. THE REPORTABLE FIGURE ON THE EV IS HIGHER THAN $15,000 TO $20,000. For a $65,000 car the statutory formula gives a notional taxable value of $13,000, and the reportable amount is that grossed up at 1.8868, about $24,500. It goes on the income statement through Single Touch Payroll, not a payment summary, and only once the total taxable value of that employee's benefits exceeds $2,000. It also affects far more than a HELP debt: the Medicare levy surcharge, the private health insurance rebate, Division 293, the super co-contribution, child support and family assistance all use it. 8. TEMPORARY ACCOMMODATION IS A REDUCTION, NOT AN EXEMPTION. Removals and storage, utility connections and relocation transport including family flights are exemptions. Temporary accommodation reduces the taxable value subject to conditions and time limits and requires the employee to be actively looking for a home. Verified against the ATO's FBT rates and thresholds (QC18846), the electric cars exemption and plug-in hybrid guidance, work-related items exempt from FBT, the reportable fringe benefits guidance and its consequences, the luxury car tax thresholds, the $20,000 instant asset write-off, company tax rates, and the exposure draft released on 17 September 2026. The 47 per cent FBT rate and the 2.0802 and 1.8868 gross-up rates apply to the FBT year ending 31 March 2027. ---------- Welcome to the podcast, our newsletter made easy. Please note, this podcast features AI-generated voices for your hosts, Mia Taylor and Leo Baker, bringing you expert insights from owner Ben De Rosa at Aevum Accounting. Each week, we're here to help you confidently navigate the ins and outs of Australian tax. Whether it's for your individual finances or the complexities of your business. We'll cut through the jargon to give you strategies for compliance, smart planning, and that ultimate peace of mind. So if you're looking to understand your obligations, maximize your financial position, or simply gain clarity on your money matters, you're in the right place. Let's get started with our review of the week. This review is from Paula Livingston. She writes, "Recently used Ben at Aevum Accounting for my end of year tax return, he was knowledgeable and easy to deal with, made everything easy to understand and simple to complete. The offices were immaculate and the staff were wonderful, so much attention to detail, even including a drinks menu. Would highly recommend, will definitely be back. Thanks Ben and team." Thanks for the amazing review, Paula. Now listeners, you have the patience of a saint. We have spent the last two weeks talking about audits, penalties, and 47% tax bills. It's been heavy. But today, today is the payoff. This is the grand finale. We are going to talk about the power plays, the specific exemptions that let you give your staff laptops, cars, and gifts completely tax-free. And to help us cross the finish line, he's back for the final lap, our FBT strategist, Harvey Green. Harvey, please tell me you brought good news. I did. I feel like Santa Claus today. No more coal. Today's about the presents. Harvey, let's start with the holy grail for small business owners. We know FBT usually hits anything that isn't cash, but there is a special section of the tax act, Section 58X. What is it? Section 58X is the work-related items exemption. It basically says if you provide an employee with a portable electronic device primarily for work use, there is zero FBT. Portable electronic device. That sounds fancy. What does it cover? It covers the toys we all love: laptops, tablets, iPads, mobile phones, even GPS units and electronic diaries. And here is the power play for our listeners. Most of you run small businesses, turnover under $50 million. Harvey, there is a special rule for them, right? Huge rule. Normally, a big corporate company can only give one laptop per year to an employee. But if you are a small business entity, that restriction is gone. You can give an employee a laptop and an iPad and a phone in the same year. As long as they are for work, they are all tax-free. [CORRECTION: the limit is narrower than this. It is one item per employee per FBT year for items with substantially identical functions, not one device full stop, so any employer can already provide a laptop and a phone. The small business concession, aggregated turnover under $50 million, is what lets you add a second device that does substantially the same job, such as a laptop and a tablet. From 1 April 2027 the limit is removed for every employer, but the exemption is withdrawn entirely for these items where they are salary sacrificed.] Let's do the math on that, because this is where the win is. Okay. Let's say an employee wants a $3,000 MacBook Pro. Option A: salary. They buy it themselves. To get $3,000 cash in their hand after tax, you'd have to pay them roughly $4,500 in salary. Option B: company purchase. You buy it for the business. You claim the GST back, $270. You claim the tax deduction. It costs the business roughly $1,900 net. [CORRECTION: two figures are out. The GST credit on a $3,000 GST-inclusive laptop is one-eleventh, $272.73, not $270. And $1,900 assumes a 30 per cent company tax rate. A business with turnover under $50 million is a base rate entity taxed at 25 per cent, so $3,000 less the $272.73 credit is $2,727.27, and the deduction saves $681.82, leaving about $2,045 net. The comparison with $4,500 of salary still holds comfortably.] So the business pays $1,900 instead of paying $4,500 in salary? Exactly. And the employee gets the brand-new MacBook. Everyone wins. If you aren't doing this for your key staff, you are crazy. Okay, I'm sold on the tech. Now let's talk about the biggest tax break in Australia right now: electric vehicles. This is the main course. The EV FBT exemption. If your company provides an electric car or a plug-in hybrid that is below the luxury car tax threshold—about $91,000—the FBT is exempt. [CORRECTION: plug-in hybrids are out. From 1 April 2025 a plug-in hybrid is not a zero or low emissions vehicle for FBT and does not qualify, unless it was already used or available for use before 1 April 2025 under a financially binding commitment to keep providing it, and even then the exemption stops the moment that commitment changes. Only battery electric and hydrogen fuel cell cars qualify now. The threshold is the luxury car tax limit for fuel-efficient vehicles, $91,661 for 2026-27, tested on the car's value the first time it is both held and used. And the exemption itself is being phased down: an exposure draft released on 17 September 2026 would keep the full exemption for cars at or under $75,000 until 31 March 2029, cut everything above that to a 25 per cent FBT discount from 1 April 2027, and drop all of them to 25 per cent from 1 April 2029. Existing leases are intended to be protected. It is not law yet, but anyone planning around this episode should move before 1 April 2027 or price in the 25 per cent version.] Zero tax on a car? That sounds too good to be true. It is zero. And it covers everything: the lease payments, the registration, the insurance, the repairs, and even the electricity to charge it. So how does the employee benefit? They use salary packaging. Let's say the lease on a Tesla Model Y is $1,500 a month. The employee agrees to reduce their pre-tax salary by $1,500. Because it comes out before tax, it only reduces their take-home pay by about $800 or $900. So they are driving a $65,000 car for $200 a week. That is incredible. But Harvey, we have to mention the reportable catch again. We learned this in episode 29. Yes. Even though the employer pays zero dollars tax, the value of the car—approximately $15,000 to $20,000—still goes on the employee's payment summary. [CORRECTION: the figure is higher than that and the paperwork has a different name. Under the statutory formula the notional taxable value of a $65,000 car is 20 per cent, so $13,000, and the reportable amount is that grossed up at the type 2 rate of 1.8868, about $24,500. It appears on the employee's income statement through Single Touch Payroll rather than on a payment summary, and nothing is reported at all until the total taxable value of that employee's benefits exceeds $2,000.] So if they have a HECS debt, their repayments will go up. [CORRECTION: the study loan is only the start. A reportable amount also feeds the Medicare levy surcharge, the private health insurance rebate, Division 293 tax, the super co-contribution, child support, and family assistance including Family Tax Benefit A and B, Child Care Subsidy and Parental Leave Pay. Model all of it before signing a novated lease, not just the HELP repayment.] They must model this with Ben first. But for most people without HECS, it's a massive win. Let's move to the Christmas party. In episode 28, we told people that the party is a trap, but Harvey, you said there is a way to make giving gifts tax-efficient. Yes. You have to choose entertainment versus non-entertainment. Taking staff to the movies or dinner, that's entertainment. It's messy. Giving staff a gift voucher, a hamper, a bottle of whiskey, or flowers, that is non-entertainment. Why is non-entertainment better? Because if the gift is under $300 and infrequent, it is exempt from FBT and tax-deductible. Wait. So if I take them to dinner, $200, it's exempt but not deductible. But if I give them a Coles voucher, $200, it's exempt and deductible? Bingo. The hamper is the tax winner. The dinner is the tax loser. So if you want to reward staff efficiently, buy the hamper. I love that. Buy the hamper. Put that on a t-shirt. Now Harvey, let's talk about the heroes. We have a lot of listeners who work in non-profits, charities, and hospitals. This is the salary packaging cap. If you work for a public hospital, you can package up to $9,010 of your living expenses—rent, mortgage—tax-free. If you work for a charity or public benevolent institution, it's $15,900. [CORRECTION: the figures are right but they are not the numbers the ATO publishes, and "charity" is too broad. The ATO publishes grossed-up caps of $17,000 for public hospitals and public ambulance services and $30,000 for public benevolent institutions and health promotion charities. Divide those by the type 2 rate of 1.8868 and you get the $9,010 and $15,900 you can actually package, and the $5,000 meal entertainment cap becomes the $2,650 mentioned next. A registered charity that is not a public benevolent institution or a health promotion charity is a rebatable employer instead, which is a 47 per cent rebate capped at $30,000 grossed up, not an exemption.] That is basically the government saying, "Here is $16,000 of your salary tax-free." Correct. And on top of that, they get a separate cap for meal entertainment of roughly $2,650. That's the dining card. You go out to dinner, tap the card, and it's paid with pre-tax dollars. If you work in those sectors and you aren't using these caps, you are literally donating your own money to the ATO. 100%. It takes 15 minutes to set up. Do it today. Harvey, we have one final power play that Ben mentioned in the notes: relocation expenses. We have a skill shortage in WA. Everyone is trying to hire from over east. This is a hidden gem. If you hire someone and they have to move their home to take the job, for example Melbourne to Perth, the costs you pay are FBT exempt. What can we pay for? Removalists, flights for the whole family, connection of utilities, even some temporary accommodation while they look for a house. You can pay for all of that tax-free. [CORRECTION: not quite all of it on the same footing. Removals and storage, connection of gas, electricity and telephone, and relocation transport including the family's flights are outright exemptions. Temporary accommodation is a reduction in taxable value rather than an exemption, and it carries conditions and time limits and requires the employee to be actively looking for a home. The package is still worth building.] It's a brilliant way to attract talent. Instead of offering a higher salary, which is taxed, offer a relocation package, which is tax-free. That is smart. That is how you win the talent war. Exactly. FBT isn't just about avoiding penalties. It's about structuring your offers so your business looks more attractive than the guy down the road. Harvey, you have delivered the goods. We started this series scared of the paper monster, and now I feel like we're ready to tame it. We've covered Episode 28: the hard truths, no school fees. Episode 29: the deep dive, logbooks save thousands. Episode 30: the power plays, tech, EVs, and hampers. It's been a journey. But if your listeners take just one thing away, don't guess. The rules are specific, but the rewards are there if you get the structure right. Absolutely. And that is where Aevum Accounting comes in. Ben De Rosa and the team live and breathe this stuff. If you are thinking about buying a ute, leasing an EV, or planning your Christmas party, talk to Ben before you spend the money. Visit us at aevumaccounting.com.au. Harvey Green, thank you for being our guide. You are officially invited to our Christmas party, which will definitely be under $300 per head. I'll bring my calculator just in case. Thanks. That's a wrap on our FBT series. Thank you to everyone who reviewed, subscribed, and sent in questions. We'll be back next week with a brand-new topic. Until then, stay savvy, stay proactive. And go buy that tax-free laptop. Goodbye for now. See ya.

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