Fringe Benefits Tax (FBT)

FBT stands for Fringe Benefits Tax, and if, as part of your remuneration, you elect to take a non-cash benefit, in the form of a car, FBT will apply.

Cash and non-cash benefits are treated differently under the taxation system. Income tax is payable on cash benefits, and Fringe Benefits Tax (FBT) is payable on most other types of non-cash or employee benefits.

When using a novated lease to finance a car it is considered a vehicle fringe benfit because a vehicle leased by your employer is made available for your private use.

All costs associated with the vehicle, including additional FBT, will be deducted from your salary by your employer.

The table below shows the statutory brackets and the corresponding statutory percentages:

 

 

 

 

 

Distance travelled during the FBT year (1 April – 31 March)

 

 

 

Statutory rate (multiplied by the cost of the car to determine a person’s car fringe benefit)

 

 

 

 

Existing contracts

 

 

New contracts entered into after 7:30pm (AEST) on 10 May 2011

 

 

From 10 May 2011

 

 

From 1 April 2012

 

 

From 1 April 2013

 

 

From 1 April 2014

 

 

Less than 15,000 km

 

 

26%

 

 

20%

 

 

20%

 

 

20%

 

 

20%

 

 

15,000 to 24,999 km

 

 

20%

 

 

20%

 

 

20%

 

 

20%

 

 

20%

 

 

25,000 to 40,000 km

 

 

11%

 

 

14%

 

 

17%

 

 

20%

 

 

20%

 

 

Over 40,000 km

 

 

7%

 

 

10%

 

 

13%

 

 

17%

 

 

20%

 

How is the taxable value of a car fringe benefit calculated?

A car fringe benefit is one of the few salary-packaging items that receive concessional taxation treatment.
 
The taxable value of a car fringe benefit is calculated by either using the Statutory Formula Method (Employee Contribution Method is part of the Statutory Formula Method) or the Operating Cost Method.

The Statutory Formula Method is used for cars mainly used for private purpose and does not require the use of a log book.

The Operating Cost Method is used for cars that have a mix of business and private use and requires the maintaining of a Log Book to the ATOs standards.

The method elected depends on your employer’s salary packaging policy and the percentage of business use of the car.

If you mainly use your vehicle for private travel, using the Statutory Formula Method will produce a lower taxable value than using the Operating Cost Method.

It is important to remember that in most instances travel to and from work is considered private travel, not business use.

The Statutory Formula Method makes no distinction between kilometres travelled for private purposes and kilometres travelled for business use.

If there is a high percentage of business use, generally over 75%, and only incidental private travel, the Operating Cost Method is used on some occasions to calculate FBT.