FBT

What is Fringe Benefits Tax?

The Fringe Benefits Tax (FBT) system is intended to ensure that tax is paid on fringe benefits provided in place of, or in addition to, salary or wages of employees.

For motor vehicles, FBT can be calculated using either the Statutory Formula Method or the Operating Cost Method.
 

What methods are the basis for a car fringe benefit calculation?

The taxable value of a car fringe benefit may be calculated by either of the following methods:
 

• Statutory Formula Method: The taxable value of the car fringe benefit is a percentage of the car's value. This percentage varies with the total distance travelled by the car during the FBT year (regardless of whether or not it is private travel). The greater the distance travelled, the lower the taxable 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 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. You will need to maintain a log book over a twelve week period to determine the private use percentage. 

What are the Statutory Percentage Rates for FBT?

If you are using the Statutory Formula Method it is important to estimate and meet your annual kilometres travelled to avoid paying additional FBT at the end of the FBT year. You can record your odometre readings when you are using your fuel card. Regular reports and web access allows you to monitor your progress during the year.

        
Annualised kilometres are calculated using the following formula:
Annualised Kilometres = A x C 
                                        B

Where A = the number of kilometres travelled in the period during the year when the car was owned or leased by

                 the employer, 
           B = the number of days in that period, &
           C = the number of days in the FBT year.
 

When is the FBT year?

The FBT year is the 12 months beginning 1 April and ending 31 March. FBT is pro-rated for any part of the FBT year where a benefit was provided.
 

What are the Minimum Residual set by the ATO Guidelines?

            • 12 months            65.50%
            • 24 months            56.25%
            • 36 months            47.00%
            • 48 months            37.50%
            • 60 months            28.25%
 

How is the taxable value calculated using the Statutory formula method?
 

Taxable value = (A x B x C) / D – E

Where A = the base value of the car,
           B = the statutory percentage,
           C = the number of days in the FBT year when the car was used or available for private use of employees,
           D = the number of days in the FBT year, &

           E = the employee contribution.
 

Download FBT Declaration Form 2010 - 2011 Click Here
 

As a respected provider in the leasing industry, we provide the required information to enable both employers and individuals to make informed leasing decisions. FleetPlus Novated recommends you seek independent professional taxation advice prior to committing to a Novated Lease.