FBT changes for salary sacrificed work-related benefits from 1 April 2027

Category: Tax & FBT | Source: Australian Taxation Office, published 7 September 2026

The ATO has flagged changes to fringe benefits tax (FBT) that take effect from 1 April 2027, the start of the 2027–28 FBT year. Employers who offer work-related benefits through salary sacrifice arrangements should review those arrangements now.

1. "Otherwise deductible" rule no longer available for some salary sacrificed expenses

Employers will no longer be able to use the otherwise deductible rule to reduce FBT on salary sacrificed expense payment fringe benefits that are covered by the new standard deduction for work-related expenses. This applies regardless of the amount and includes reimbursements or payments for home office, home phone and internet, and self-education expenses. The rule still applies to expense payments that aren't covered by the standard deduction, or that are covered but not provided under salary sacrifice.

2. Salary sacrificed work-related items lose their exemption

Portable electronic devices, computer software, protective clothing, briefcases and tools of trade will no longer be FBT-exempt when provided through salary sacrifice. They remain exempt when provided outside a salary sacrifice arrangement.

3. Multiple items with the same function can be exempt

The current limit of one exempt item per employee per FBT year (for items with substantially identical functions) is removed. Employers can provide more than one such item and keep the exemption, as long as the items are mainly used for work and aren't salary sacrificed. The concession also extends to all employers, not just small businesses.

What employers should do now

Review the salary sacrificed benefits you currently provide, identify which expenses fall under the standard deduction, and estimate the FBT impact for the 2027–28 FBT year. Make sure your FBT calculations, record keeping and lodgment processes are ready before 1 April 2027.

Read the full ATO update: FBT changes for salary sacrificed work-related benefits

Need help reviewing your salary packaging arrangements before the changes start? Contact LeaderTech.

This article is general information only and does not take into account your circumstances. It is not endorsed by the ATO.