FBT Power Plays: The Boss-Level Guide to Salary Packaging
Updated: Sep 22
FBT exemptions salary packaging Australia
The last two articles were heavy going. We covered school fees that cost $37,000 to pay, phantom income pushing employees into HECS repayments, and golf days that quietly attract a 47% tax. Not exactly cheerful reading.
This one is different. FBT isn't only a compliance problem. Used properly, it's a planning tool. There are specific exemptions in the tax act that let you give staff laptops, electric vehicles, and meaningful gifts completely tax-free. And if you work in healthcare or the not-for-profit sector, the salary packaging rules are genuinely extraordinary.
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Work-Related Electronics: The Section 58X Exemption
Section 58X of the tax act says if you give an employee a portable electronic device primarily for work, the FBT is zero. Full stop.
That covers laptops, tablets, iPads, mobile phones, GPS units, and electronic diaries.
The small business advantage: large corporations can only give one device per category per employee each year. If your business turns over less than $50 million, that restriction doesn't apply. You can give an employee a laptop, an iPad, and a phone in the same year and pay zero FBT on all of it, as long as they're used primarily for work.
Update, September 2026: the limit is about items with substantially identical functions, so a laptop and a phone were never caught by it in the first place. The small business concession is what lets you add a second device doing substantially the same job, such as a laptop and a tablet. From 1 April 2027 the one-item limit is removed for every employer, but the exemption is withdrawn for these items where they are provided through a salary sacrifice arrangement.
Here's what the numbers look like on a $3,000 MacBook Pro:
Via salary: to put $3,000 in the employee's hand after tax, you'd need to pay roughly $4,500 in gross salary
Via company purchase: buy the device, claim the GST back, claim the tax deduction. Net cost to the business is around $1,900
The result: the business spends $1,900 instead of $4,500, the employee gets the MacBook
If you're not doing this for your key staff, you're spending about $2,600 more than you need to, every time.
Update, September 2026: the arithmetic needs a small correction. The GST credit on a $3,000 GST-inclusive laptop is one-eleventh, $272.73. And the $1,900 net cost assumes a 30 per cent company tax rate. A business turning over less than $50 million is a base rate entity taxed at 25 per cent, which puts the real net cost at about $2,045 and the saving at about $2,455 rather than $2,600. A $3,000 laptop also sits under the $20,000 instant asset write-off for businesses turning over less than $10 million, so the deduction is immediate.
Electric Vehicles: The Best Tax Break Available Right Now
If your company provides an electric vehicle (EV) below the luxury car tax threshold (approximately $91,000), the FBT is completely exempt. Zero.
Update, September 2026: three things have changed since this was written. Only battery electric and hydrogen fuel cell cars qualify. From 1 April 2025 a plug-in hybrid is no longer a zero or low emissions vehicle for FBT, unless it was already provided before that date under a financially binding commitment that has not since been altered. The threshold is the luxury car tax limit for fuel-efficient vehicles, $91,661 for 2026-27, and it is tested on the car's value the first time the car is both held and used. And the exemption 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 cars above $75,000 to a 25 per cent FBT discount from 1 April 2027, and move every eligible car to that 25 per cent discount from 1 April 2029. Existing leases are intended to be protected. None of it is law yet, but it changes the maths on anything signed after 1 April 2027.
The exemption covers lease payments, registration, insurance, servicing, and the electricity to charge the car.
Here's how it works with salary packaging:
The employee reduces their pre-tax salary by the monthly lease cost (for example, $1,500 per month for a Tesla Model Y)
Because the cost comes out before tax, the reduction in take-home pay is only around $800 to $900 per month
The employee drives a $65,000 car for roughly $200 a week
Worth noting: even though the employer pays zero FBT, the car's value (typically $15,000 to $20,000) still appears on the employee's income statement as a Reportable Fringe Benefit. If they have a HECS debt or are close to a Medicare Levy Surcharge threshold, that matters. Always model the full picture with Ben before packaging.
Update, September 2026: the reportable figure is higher than that. Under the statutory formula a $65,000 car has a notional taxable value of $13,000, and the reportable amount is that grossed up at the type 2 rate of 1.8868, which is about $24,500. Nothing is reported at all until the total taxable value of that employee's benefits exceeds $2,000. And the reported amount reaches further than a HECS debt and the Medicare levy surcharge: it also feeds 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.
Gifts vs. Entertainment: The Hamper Wins Every Time
There are two categories of staff rewards and the tax treatment is completely different.
Entertainment covers movies, dinners, and experiences. Non-entertainment covers gift vouchers, hampers, wine, and flowers. If a non-entertainment gift is under $300 and given infrequently, it is both FBT-exempt and tax-deductible.
Type | Example | Under $300? | FBT-Exempt? | Tax Deductible? |
Entertainment | Staff dinner | Yes | Yes | No |
Non-entertainment | Gift hamper or voucher | Yes | Yes | Yes |
Entertainment | Staff dinner over $300 | No | No | Yes (with FBT) |
The dinner is the tax loser. The hamper is the tax winner. If you want to reward staff efficiently, buy the hamper.
Salary Packaging Caps for Healthcare and NFP Workers
If you work in a public hospital, a registered charity, or a public benevolent institution, the salary packaging caps available to you are some of the most underused benefits in Australian employment.
Sector | Living Expenses Cap (tax-free) | Meal Entertainment Cap |
Public Hospital | $9,010 per year | $2,650 per year |
Charity or PBI | $15,900 per year | $2,650 per year |
A charity worker can receive up to $15,900 of their salary, used for rent, mortgage, or everyday expenses, completely tax-free. On top of that, there's a $2,650 dining card for restaurants, paid with pre-tax dollars.
Update, September 2026: two clarifications on the table above. These are the amounts of pre-tax salary you can package. The ATO publishes them grossed up, as caps of $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. Divide by the type 2 gross-up rate of 1.8868 to move between the two. And the $15,900 is not available to every registered charity. A 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 rather than an exemption. Check which one your employer is before you count on the figure.
If you work in one of these sectors and haven't set up salary packaging, you're essentially giving money away. It takes about 15 minutes to arrange. Do it today.
Relocation Packages: A Smarter Way to Attract Talent
With skill shortages across Western Australia, competitive employers are looking beyond base salary. Relocation benefits are genuinely FBT-exempt, which makes them a powerful way to attract people from interstate.
If you hire someone who has to move their home to take the role, the following costs can be covered tax-free:
Removalist costs for the employee's household
Flights for the employee and their family
Utility connection costs at the new property
Temporary accommodation while they find a permanent place
A $10,000 relocation package delivers the full $10,000 in value to the employee. A $10,000 salary top-up gets taxed at their marginal rate, so they keep less. Same cost to you, much more valuable to them.
Update, September 2026: one item on the list above works differently. 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 permanent home.
At Aevum Accounting, Ben De Rosa specialises in structuring salary packages, EV arrangements, and NFP packaging to make sure you're getting every dollar of benefit the tax system allows.
Prefer to listen? We covered this in FBT Power Plays: The Boss-Level Guide to Salary Packaging, episode 30 of the Aevum Accounting Podcast.
Disclaimer: The information and strategies shared in this article are for general informational purposes only and do not constitute specific tax or financial advice. Everyone's situation is unique, and tax laws are complex and constantly evolving. For personalised advice tailored to your specific individual or business needs, we always recommend consulting with a qualified professional at Aevum Accounting.
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