Foreign-owned businesses operating in Australia should review their salary sacrifice arrangements ahead of changes to fringe benefits tax (FBT) rules from 1 April 2027.
The Australian Taxation Office will restrict employers’ use of the otherwise deductible rule for certain expense payment fringe benefits and remove FBT exemptions for specified work-related items provided through salary sacrifice arrangements.
The changes will affect reimbursements and payments for expenses covered by the standard deduction, including home office, home phone, internet and self-education expenses, regardless of their value.
Portable electronic devices, computer software, protective clothing, briefcases and tools of trade will also lose their FBT exemption when provided through salary sacrifice arrangements.
However, employers can continue to use the otherwise deductible rule for expenses outside the standard deduction, or for expenses covered by the standard deduction that are not provided under a salary sacrifice arrangement. Eligible work-related items will also remain exempt when provided outside salary sacrifice arrangements.
The changes will expand the exemption for eligible work-related items that are mainly used for work purposes and not provided through salary sacrifice. Employers will be able to provide multiple items with the same function in an FBT year without incurring FBT. The exemption will also extend to all employers, removing the current limit of one exempt item per employee per FBT year and the restriction to small businesses.
Foreign-owned businesses employing staff in Australia should review their salary sacrifice arrangements and identify expenses covered by the standard deduction to determine the impact on their FBT liabilities. They should also ensure they can calculate FBT correctly, maintain appropriate records and meet reporting and lodgment obligations for the 2027-2028 FBT year.
Last updated: 14th Oct 2026
About the Author
Ro Elvinia is ABN Australia's Customer Success and Marketing Manager. She holds a bachelor’s degree in mass communication, majoring in journalism, and also has an academic background in civil engineering. With over a decade of experience in professional writing and a background spanning journalism, Australian immigration, and business services, Ro brings a unique mix of communication and analytical expertise. She works closely with international clients and contributes to ABN Australia's content strategy, helping global businesses stay informed and confident as they navigate the Australian market.
Ro Elvinia
Marketing Manager