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FBT related to car

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Initiate

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Hi, 

We are new  company and we have car under business name which are more than 10 . some of this car are for directors to use and employees which are used for business as well as private too. 

 

From the FBT perspective what should be considerd  ? and how we have to start process for the registering for it  ?

can you please help how we should process for FBT purpose internally as company as well as for ATO obligations ?

 

thank you

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ATO Certified Response

Community Moderator

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Hi @mdp,

 

By allowing employees’ to  access the company cars for private use you are providing them with a fringe benefit. Fringe benefits provided to employees and/or their associates are subject to Fringe Benefits Tax (FBT), which is currently set at a rate of 47%.

 

For FBT purposes, a car is any of the following:

  • a sedan or station wagon
  • any other goods-carrying vehicle with a carrying capacity of less than one tonne, such as a panel van or utility (including four-wheel drive vehicles)
  • any other passenger-carrying vehicle designed to carry fewer than nine passengers.

To calculate the taxable value of a car fringe benefit, an employer must use either:

  • the statutory formula method (based on the car’s cost price), or
  • the operating cost method (based on the costs of operating the car).

You can choose whichever method yields the lowest taxable value, regardless of which method you used in a previous year. However, if you've not kept the required documentation for the operating cost method (such as log books), you must use the statutory formula method.


This link provides further information on Car Fringe Benefits and how to calculate the taxable value of the benefit you are providing.

 

In relation to setting up your internal processes this is not something we can give advice on and suggest  you talk to your accountant about this enquiry.


Employers must be registered for FBT and lodge an FBT return if they are liable to pay FBT during the FBT year (1st April to 31st March).


If you go to our website we have some information on how to register for FBT.  


If you provide certain fringe benefits with a total taxable value of more than $2,000 during the FBT year, you must report the grossed-up taxable value of the fringe benefits on the employee's payment summary for the corresponding income year.

 

Hope this helps! Thanks, NateH

 

3 REPLIES 3

Community Moderator

Replies 2

Hi @mdp,

 

Thanks for getting in touch! We have sent your question off to a specialist area to get a response for you. We'll be in touch soon Smiley Happy

 

Thanks, NateH

Initiate

Replies 1

Thanks Nateh

Most helpful response

ATO Certified Response

Community Moderator

Replies 0

Hi @mdp,

 

By allowing employees’ to  access the company cars for private use you are providing them with a fringe benefit. Fringe benefits provided to employees and/or their associates are subject to Fringe Benefits Tax (FBT), which is currently set at a rate of 47%.

 

For FBT purposes, a car is any of the following:

  • a sedan or station wagon
  • any other goods-carrying vehicle with a carrying capacity of less than one tonne, such as a panel van or utility (including four-wheel drive vehicles)
  • any other passenger-carrying vehicle designed to carry fewer than nine passengers.

To calculate the taxable value of a car fringe benefit, an employer must use either:

  • the statutory formula method (based on the car’s cost price), or
  • the operating cost method (based on the costs of operating the car).

You can choose whichever method yields the lowest taxable value, regardless of which method you used in a previous year. However, if you've not kept the required documentation for the operating cost method (such as log books), you must use the statutory formula method.


This link provides further information on Car Fringe Benefits and how to calculate the taxable value of the benefit you are providing.

 

In relation to setting up your internal processes this is not something we can give advice on and suggest  you talk to your accountant about this enquiry.


Employers must be registered for FBT and lodge an FBT return if they are liable to pay FBT during the FBT year (1st April to 31st March).


If you go to our website we have some information on how to register for FBT.  


If you provide certain fringe benefits with a total taxable value of more than $2,000 during the FBT year, you must report the grossed-up taxable value of the fringe benefits on the employee's payment summary for the corresponding income year.

 

Hope this helps! Thanks, NateH