In relation to a novated lease, is a residual tax benefit the same as a fringe tax benefit?

 Author: AriATO(Community Support)Community Support

9 Mar 2022

Hi @nat94

Thanks for your patience.

A residual benefit is a type of fringe benefit and includes the private use of a dual cab ute over one tonne. The way the taxable value is worked out depends if it's classed as in-house or external. In-house is essentially if your employer also offers the same services/benefits to the public in the ordinary course of business. Take a look at Chapter 18 of the FBT guide for more details.

Dual cabs qualify for the work-related use exemption only if they are not designed for the principal purpose of carrying passengers. This means the employer isn't subject to FBT if the vehicle is used for work purposes and this is separate to a novated lease.

A novated lease is deemed a fringe benefit on it's own because you benefit from the arrangement. The type of fringe benefit will depend on the lease being bona fide or non-bonafide. See our website about car leasing fringe benefits.

The installed options are the factory-installed options. This is what's described under a different section about the car limit. Although factory-installed options do reduce the carrying capacity you should check with the novated lease provider first (if that's what you're considering). We received another post recently about the difference between payload and carrying capacity and what the client is experiencing with their provider.