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Motor Vehicles
Motor Vehicles are by far the most common fringe benefit. Essentially, this type of benefit arises where an employer’s car is used by an employee for any private purposes, not with standing that the vehicle is also used for business purposes. Generally, this situation arises where an employee is provided with a vehicle for travel between work and home and the car is parked at the employee’s home or the employee uses a vehicle for any other private use.
The Fringe Benefits Tax Assessment Act 1986 (FBTAA 1986) allows two methods for calculating the taxable value of the motor vehicle fringe benefit -
1. Statutory Formula Method
2. Operating Cost Method
We recommend providing us with details to calculate the taxable value under both the above methods; this then enables us to choose the method which gives you the best result for FBT purposes.
The Statutory Formula method calculates the taxable value of the benefit depending on how many kilometres have been travelled during the FBT year. The more kilometres travelled the lower the taxable value.
The record keeping for the operating cost method is much more onerous than the statutory formula method but this can, in many circumstances achieve a lower FBT result. The taxable value is calculated by applying the log book percentage against the costs of operating the vehicle for the FBT year.
Even after we have done all the calculations, we may reduce the taxable value of the fringe benefit to nil through employee reimbursements or contributions. This can actually be paid in cash (e.g. employee pays for petrol) but is usually performed by way of a journal entry against your loan account (i.e. reducing your loan balance with the company). Even though we may not physically lodge an FBT return in many cases, we still need all of the information to perform the necessary calculations which enable us to provide you with an appropriate journal entry.
Kreston Dormers have prepared a FBT Motor Vehicle expense and logbook checklist to assist you in assessing your FBT liability. If you require further information or assistance in preparing your FBT return feel free to contact us at fbt@krestondormers.com or on (02) 9874 8038
Car Parking Fringe Benefits
Car parking facilities provided by an employer to an employee may give rise to a car parking benefit. A car parking benefit arises where the following conditions are satisfied:
 a car is parked on “business premises” which is within 1 km of
a “commercial parking station” and the car parking station's
fee for all day parking is more than $7.25 from the first day of
the FBT year (ie. from 1 April 2009)- the car is parked on the business premises for more than 4
hours in total from 7am to 7pm on the particular day
- the provision of car parking facilities is in respect of the
employee’s employment
- the car is parked at or in vicinity of the primary place of the
employee’s employment
- the car on that day is used in connection with travel from home
to work
As there are three methods of calculating the taxable value of a car parking fringe benefit, you will need to discuss your circumstances with us to determine the information you may need to provide. However we will generally need to know how many car parking spaces can reasonably be used by employees and the lowest commercial car park rate charge within 1 km of your business.
Kreston Dormers have prepared a FBT Motor Vehicle expense and logbook checklist to assist you in assessing your FBT liability. If you require further information or assistance in preparing your FBT return feel free to contact us at fbt@krestondormers.com or on (02) 9874 8038 |
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