FBT Motor Vehicle

/FBT Motor Vehicle
FBT Motor Vehicle2017-04-21T11:53:18+00:00

A car fringe benefit commonly arises when you (as an employer) make a car you own or lease available to an employee to use
privately. The motor vehicle is still being treated as available for private use even if the car is garaged at the employee’s home.

There are two methods for valuing a car fringe benefit:

  • Operating Cost Method
  • Statutory Formula Method

Operating Cost Method

Under the Operating Cost Method, the taxable value of a car fringe benefit is calculated from multiplying the operating expenses
of that motor vehicle (during the period over which the benefit has arisen) by the private use percentage. The private use
percentage is calculated by reference to a logbook (100% minus logbook business use percentage).

A logbook must be kept, in an approved format, for a continuous 12 week period every 5 years. Where a substantial change in
business use occurs or generally, when additional motor vehicles are purchased, a new log book will be required. Please ensure
you retain logbooks for the relevant period. The tax law denies any claim for business use if the logbook cannot be produced,
even for a vehicle with an ‘obvious’ business usage.

Statutory Formula Method

Under the Statutory Formula Method, the taxable value of a car fringe benefit is calculated from multiplying the base value of
that car by the statutory rate. The taxable value is then reduced by any employee contribution.

The statutory fractions for the motor vehicle fringe benefits
provided prior to 7.30pm AEST on 10 May 2011 where
there was a pre-existing commitment in place to
provide the car after this time are as follows:

Less than 15,000 kms      26%
15,000 to 24,999 kms      20%
25,000 to 40,000 kms      11%
Greater than 40,000 kms      7%

The statutory fractions for any new commitments entered into
from 7.30pm AEST on 10 May 2011 are as follows:

Less than 15,000 kms      20%
15,000 to 24,999 kms      20%
25,000 to 40,000 kms      20%
Greater than 40,000 kms      20%

Where only employees fuel and oil costs are reimbursed, you should obtain an employee declaration as to the amount and the
percentage of business use, as this may reduce the taxable value. Odometer readings are also required at 1 April and 31
March.

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