Fringe benefits tax: is there a better way?
Published Date: 16 Feb 2026
In 1986, Australia introduced fringe benefits tax to prevent high net worth individuals from avoiding personal income tax by receiving non-cash benefits in lieu of taxable salary and wages. The FBT regime provided a framework for valuation by introducing fringe benefit categories that are connected to specific valuation methodologies. It also introduced concessions in the form of exemptions and reductions. Despite these reforms, the FBT regime still does not meet the “good tax” criteria. It imposes a high compliance burden on taxpayers while generating relatively low tax revenue. The complexity of benefit identification, valuation methodologies, and the exemption and reduction framework, along with the reporting requirements for individual income tax purposes, highlight the inefficiency and lack of simplicity in the current FBT system. This article will explore the complexities of the current FBT framework and discuss ongoing equity and efficiency issues that challenge its classification as a “good tax”. The article recommends simplifying benefit categories, harmonising valuation methodologies, and taxing fringe benefits through the pay as you go withholding framework.
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- Published By: Sam Gathercole
- Published On:16 Feb 2026
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