Fringe Benefits Tax, or FBT, is a tax payable by employers on the value of certain fringe benefits that have been provided to their employees. The supply of a motor vehicle under a Novated Lease arrangement by an employer to an employee would generally attract an FBT liability.

How does the number of kilometres that I travel affect my FBT liability?

Under the Statutory Method, the FBT liability is calculated based on the distance the vehicle travelled in the FBT year (1st April - 31st March). The following schedule outlines the FBT kilometre brackets and the percentage to include in the Statutory Method FBT formula which Advance car loans utilises.

The Statutory Formula Method

Using the Statutory Formula Method

[(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

D = the number of days in the FBT year

E = the employee contribution

What is the base value of a vehicle? (A)

The base value of the vehicle is the purchase price paid by the employer including GST. The base value includes all accessories (for example, air-conditioning and car phone) but excludes registration and stamp duty costs.

What is the statutory fraction? (B)

The statutory fraction is based on the total annualised kilometres travelled by the vehicle as shown in the table below. If the vehicle is held for less than the full year (that is, purchased or sold during the year), the annualised kilometres are the total kilometres travelled during the period, multiplied by the number of days in the FBT year and divided by the number of the days held.).

Statutory Percentage

Annualised number of whole kilometres	Statutory Percentage (%)
Less than 15,000	26
15,000 to 24,999	20
25,000 to 40,000	11
More than 40,000	7

What do you mean by availability of the vehicle? (C)

The days on which the car fringe benefit is provided is calculated as the number of days the vehicle is available, or deemed available for private use.

A car is available or deemed available for private use if:

• The car is used for business AND for private means.
• The car is garaged at the employee's residence or place of accommodation or
• The car is not at the Employer' business premises and the employee has the use, custody or control of the car

What is an FBT year? (D)

FBT is calculated based upon the FBT year which runs from 1st April to 31st March.

What is the employee contribution?(E)

A post-tax payment made by the employee towards the cost of the fringe benefit reduces the taxable value. The payment must actually have been made within the current FBT year before it can be taken into account. The employee contribution includes any non-reimbursed payment of car expenses (registration, insurance, repairs, fuel etc.). In order to obtain this FBT reduction against liability, documentary evidence must be supplied ie fuel receipt for vehicle detailing the date, amount paid and supplier.

An employee contribution payment can reduce the FBT Taxable Value of the vehicle and therefore the FBT liability payable. Using this method may also save the employee money and save the employer from having to do FBT reporting for this vehicle.