Motor Vehicle FBT: What you need to know

StuartTax

March is fringe benefit tax season. “Yippee!” we hear you shout! The FBT year is 1 April – 31 March, so it’s around this time we get asked about FBT. Particularly, one of the most common forms of fringe benefit: cars.

What is a car fringe benefit?

A common car fringe benefit is where you (the employer) make available a car you ‘hold’ for the private use of an employee. A car you ‘hold’ generally means a car you own or lease.

Taxable value

You can calculate the taxable value of a car fringe benefit using either of the following methods:

Statutory formula method

Following the 2011 Budget, changes were made to the statutory formula method which has resulted in the old progressive statutory rates being replaced with a single statutory rate of 20% (subject to transitional rules), which applies regardless of kilometers travelled.

This rate applies to all car fringe benefits after 7.30pm AEST on 10 May 2011, except where there is a ‘pre-existing commitment’ in place to provide the car (for a meaning of the term ‘commitment’ see section 7.4). The taxable value of the car fringe benefits is the statutory rate multiplied by the car’s base value.

Operating cost method – the taxable value of the car fringe benefit is a percentage of the total costs of operating the car during the fringe benefits tax (FBT) year. The percentage varies with the extent of actual private use. The lower the incidence of actual private use, the lower the taxable value.

Fringe benefits tax – rates and thresholds for 2015 an beyond

Fringe benefits tax rates

The FBT rate changes for the year ending 31 March 2015 onwards.

FBT year                                                                     FBT rate

Ending 31 March 2014 (and prior years)                    46.5%

Ending 31 March 2015                                                47%

Ending 31 March 2016 and 31 March 2017               49%

Ending 31 March 2018 onwards                                 47%

To minimise your risk of being investigated keep up to date paperwork including odometer readings at 31 March, employee declarations and logbooks

A list of Motor Vehicles exempt from FBT can be found here.

If you want more information on your rights download them here

Need a hand with your 2014-2015 FBT declarations?

Talk to us to arrange a time.

 

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