Benefit information

Vehicle fringe benefits overview

A car benefit arises when a car owned or leased by an employer is made available for any private use to an employee or their associate in an employment context. A car benefit also occurs when a third party, by arrangement with the employer, provides a car to an employee. To be considered a fringe benefit, the car must be used, or be available to be used, for private purposes. Certain types of motor vehicles (eg. single cab utes) may be exempt from FBT ;if private use of the vehicle is limited to home to work travel and other minor, infrequent and irregular private travel. More details are on the ATO website.
If the taxable value of the benefit is less than $300, the benefit is considered a minor benefit and you are not liable for FBT. You should seek tax assistance in determining the correct treatment of this type of benefit in your particular case.
For detailed information from the ATO about this benefit, go to Fringe benefits tax - a guide for employers, Chapter 7 - Car fringe benefits.
note
For fringe benefit tax purposes, a vehicle can be a type of motor vehicle other than a passenger car. Examples include a road vehicle designed to carry nine or more passengers, a panel van, or a utility truck designed to carry loads of one tonne or more. The provision of such motor vehicles may be a residual benefit. If you are unsure whether a vehicle provided is considered a car, consult your tax adviser.
The taxable value of a car fringe benefit can be calculated using the statutory formula or operating cost formula. The ATO ;provides a calculator to help work out the taxable value.

Electric Vehicles

Retrospectively from 1 July 2022, car fringe benefits where the car is low and zero-emissions vehicles under the luxury car tax threshold are exempt from fringe benefit tax. This exemption applies to the following types of vehicles:
  • Fully electric vehicles with a battery powered motor
  • Plug-in hybrid electric vehicles that can be plugged in and charged with electricity but also contain an internal combustion engine powered by liquid fuels
  • Hydrogen fuel cell electric vehicles.
The electric vehicle exemption does not apply to hybrid vehicles with an internal combustion engine that cannot be plugged into an electricity source or cars priced over the luxury car threshold (currently $89,332). The vehicle must be designed to carry a load of less than one tonne and fewer than nine passengers. The exemption applies to vehicles are both held and used on after 1 July 2022.
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The taxable value of the car fringe benefit must still be considered when working out whether an employee has a reportable fringe benefits amount (RFBA). Although exempt from tax, the taxable value of the car fringe benefit amount for electric vehicles is reportable and appears on the benefit workpaper, reports, and RFBA letters.
note
A message will appear if the vehicle doesn't meet the qualifying criteria for electric vehicles or if another field is changed so that the vehicle doesn't meet the legislative criteria. For example, the value in the
Adjusted Base
 field must not be over the luxury car threshold.

Residual Vehicle Benefits

An employee's right to use a vehicle other than a car for private purposes may give rise to a residual benefit. For these purposes a vehicle that is not a car means a motor vehicle (including a four wheel drive vehicle), including any of the following:
  • any vehicle, designed to carry a load of more than one tonne
  • any other road vehicle designed to carry 9 or more passengers
  • a motor cycle or similar vehicle

Documentary evidence

Documentary evidence is the same as that required by an employee to claim a deduction under the Income Tax Assessment Act. Examples of acceptable documents include receipts, invoices or similar documents. Documents must be in English if incurred in Australia, or may be in the language of the country in which the expense was incurred if outside Australia. Documentation must show the following:
  • The date on which the expense was incurred
  • The supplier's name
  • The amount of the expense, expressed in the currency in which the expense was incurred
  • The nature of the goods or services supplied
  • The date on which the document was filled out.
Documentary evidence must be obtained when the expense is incurred or as soon as is reasonably practical thereafter. If the supplier does not ordinarily provide such documentary evidence, a statement or certificate containing the above details from the supplier is sufficient. If the contribution is in the form of unreimbursed fuel or oil expenses, documentary evidence of those expenses, or a fuel or oil expenses declaration, must be provided to the employer. Documentary evidence must be provided to the employer before the due date for lodgment of the FBT return to be allowable.

Shared benefit

A shared benefit occurs when an employer provides one benefit which is shared between two or more employees.
For example, a pool car may be made available for the private use of several employees. The employer can allocate the value of the shared benefit between employees in the Shared Car workpaper to allow the allocation of the calculated payable FBT to be tracked back to these employees and /or their cost centres.
The allocation should be done in a manner that is fair and reasonable. The employee's share is the portion of the taxable value of the shared benefit that reasonably reflects the amount of the benefit each employee received. Use discretion and take into account all relevant factors, such as the fact that not all employees use the benefit to the same extent.

Leased cars

If you lease a car for your employee's private use, fringe benefits tax (FBT) applies. There may be a difference in the amount of FBT you pay if a car is leased. For more details about leased cars and FBT, see this topic on the ATO website: www.ato.gov.au/Business/Fringe-benefits-tax/Types-of-fringe-benefits/fbt-on-cars,-other-vehicles,-parking-and-tolls/cars-and-fbt/car-leasing-and-fbt/

This article applies to:

  • Product: ONESOURCE Fringe Benefits Tax