• Determining the statutory percentage

    A flat statutory rate of 20% applies (subject to transitional rules), regardless of the distance travelled, to all car fringe benefits you provide after 7.30pm AEST on 10 May 2011 (except where there is a pre-existing commitment in place to provide a car).

    The statutory percentages for car fringe benefits provided before 7.30pm AEST on 10 May 2011, or where you have a pre-existing commitment in place to provide the car after this time, are as follows:

    Total kilometres travelled during the year

    Statutory percentage

    Less than 15,000


    15,000 to 24,999


    25,000 to 40,000


    More than 40,000


    You can continue to use these statutory rates for all pre-existing commitments unless there is a change to that commitment.

    Transitional arrangements and rates

    The move to one statutory rate of 20% will be phased in over four years. There will be transitional arrangements that apply to any new commitments entered into from 10 May 2011 to 31 March 2015. Where there is a change to a pre-existing commitment these transitional arrangements will also apply. The following statutory rates should be used:

    Total kms
    travelled during
    FBT year

    Statutory rate

    10 May 2011

    1 Apr 2012

    1 Apr 2013

    1 Apr 2014

    Less than 15,000





    15,000 to 25,000





    25,000 to 40,000





    More than 40,000





    Skipping the transitional arrangements

    For any new commitments entered into during this period, you can choose to skip the transitional arrangements and apply the 20% statutory rate; however, this choice is subject to certain conditions mentioned below.

    You cannot skip the transitional arrangements where an employee would be worse off as a result of this choice. That is, the employee cannot be placed at a direct financial disadvantage as a result of this choice, unless you have obtained the consent of the employee.

    For example, you cannot require an employee to bear the financial impact of skipping the transitional arrangements by charging the employee a higher salary packaging amount as a result of an increase in FBT payable merely to save on compliance costs, unless you have obtained the consent of the employee to do so.

    The choice to skip the transitional arrangements is on a car-by-car basis.

    You do not need to notify us of your choice, as your business records are sufficient evidence of this.

    Meaning of the term commitment

    A 'commitment' is entered into at the point there is a financially binding commitment to a transaction on one or more of the parties and it cannot be backed out of. The commitment needs to be one that relates to the application or availability of the car to an employee or associate.

    For example, there are a number of steps involved where you negotiate with an employee and a salary packaging provider to put in place a novated lease arrangement in relation to a car. A commitment would generally be entered into, and would be financially binding, when you or the employee orders the car that is to be provided by way of a novated lease arrangement and there is a financial penalty if the order is cancelled.

    The term 'pre-existing commitment' means a commitment to the application or availability of the car that was made before 7.30pm AEST on 10 May 2011.

    Where you, or an employee or their associate, has committed to the car before 7.30pm AEST on 10 May 2011, but provision of the car fringe benefit does not take place until after 7.30pm AEST on 10 May 2011, the old statutory rules will apply.

    Example: Commitment entered into before 7.30pm AEST 10 May 2011 but car delivery is delayed

    During April 2011, Constance began discussions with her employer and a salary packaging provider about obtaining a car through a salary sacrifice arrangement.

    On 2 May 2011, Constance agreed to a particular option put forward by the salary packaging provider and the car was ordered.

    The car is scheduled for delivery on 1 August 2011, at which point she will sign documents with the leasing provider for the provision of the car.

    As Constance entered into a commitment on 2 May 2011, the old statutory rules will apply.

    Change to a pre-existing commitment - same employer

    Alterations to a pre-existing commitment can result in the application of the new 20% flat rate (or transitional rate). Examples of such alterations include:

    • refinancing the car
    • alterations to existing lease contracts, such as changing the duration of an existing lease contract and changes to a lease to reflect a revised residual value
    • where accessories (such as window tinting, DVD players, luggage racks or bull bars) are fitted to a leased car after the lease started, the lease is altered and lease payments are increased to reflect this change.

    If changes such as these are made then, where you remain as the employer, you will only begin to apply the flat 20% rate (or applicable transitional rate) from the beginning of the next FBT year.

    End of attention

    Example: Change to a pre-existing commitment made part way through the FBT year - same employer

    Blake entered into a novated lease arrangement with his employer in 2009. The original lease period expired in September 2011. The car travelled 32,000 kilometres in the 2011-12 FBT year and the annualised kilometres travelled in the 2012-13 FBT year will be 34,000. The use of the car is valued under the statutory formula method.

    In August 2011, Blake decided to refinance the same car for another year and signed documents agreeing to extend the lease by 12 months. This would be considered to be a change to the pre-existing commitment and the new flat 20% rate (or transitional rate) can apply. However, the new rates will only begin to apply from the beginning of the next FBT year following the date of this changed commitment (that is, from 1 April 2012).

    This is because a changed commitment to the car by the same employer began to apply part way through an FBT year in relation to a car that was available from 1 April 2011. The statutory rate of 0.11 (that is, the rate under the old rules) will apply for the entire 2011-12 FBT year.

    For this car, the new statutory rates will begin to apply from 1 April 2012. Accordingly, for the FBT year starting on 1 April 2012, the transitional rate of 0.17 will apply.

    Change of employer or change of car

    FBT applies to you as an employer. Any change of the employer, even within the same group of companies, will constitute a new commitment to the application or availability of the car by the new employer. This means the statutory rate of 20% (or applicable transitional rate) will be used by the new employer immediately.

    Likewise, any change of car (after 7.30pm AEST on 10 May 2011) will always be a new commitment to which the 20% flat rate (or applicable transitional rate) will apply immediately, even where the employer stays the same.

    Example: Change in employer

    Anna works for X Co and entered into a three year novated lease arrangement with her employer in January 2010. The car fringe benefits are valued by her employer using the statutory formula method.

    On 12 November 2011, Y Co officially takes over X Co and Anna is now an employee of Y Co.

    As Anna's employer has changed, car fringe benefits provided by the new employer from 12 November 2011 will come under the new statutory rates immediately.

    Alterations that would not be considered to be changes to a pre-existing commitment

    Any alterations that do not result in a change to the financially binding commitment to the application or availability of the car will not be considered to be changes to a pre-existing commitment and the old statutory rates can continue to be applied. Examples of alterations that would not be considered to be changes to a pre-existing commitment include:

    • more or fewer kilometres travelled resulting in a change to the amount of FBT payable and subsequent payments by the employee to you under a salary packaging arrangement, but does not involve an amendment or change to the lease contract
    • adjustments to salary packaging arrangements which alter post-tax employee contributions
    • use of an employer's 'fleet car' by different employees (not involving any salary sacrifice arrangements).

    Annualised kilometres

    If you own or lease a car for part of an FBT year, you may need to work out how many kilometres the car would have travelled if you had owned or leased it for the whole year.

    For example, where you acquire a car halfway through the year and the car travels 12,000 kilometres in the remaining 182 days of the year, this would give you an annual distance of 24,065 kilometres.

    You can use the following formula to calculate an annualised figure if you use the old statutory rates or the transitional rates:

    A  x  B


    • A = the number of whole kilometres travelled in the period during the year when you owned or leased the car
    • B = the number of days in the FBT year
    • C = the number of days in that period.
      Last modified: 08 May 2012QC 17818