The amount that would otherwise be the taxable value of a car fringe benefit is reduced by the amount of any employee contribution.
An employee contribution may be an amount paid either:
- directly to you by the employee for use of the car - the employee contribution must be made from the employee's after-tax income and is included in your assessable income
- by the employee to a third party for some of the car's operating costs (for example, fuel) and these contributions are not included in your assessable income.
However, the employee must provide you with documentary evidence of the expenditure (for example, receipts or invoices). In the case of petrol and oil costs, a declaration from the employee is sufficient for this purpose and receipts are not required. The declaration must be in a form approved by the Commissioner. For the approved declaration, refer to Declarations.
An employee contribution (other than a contribution of services as an employee) is treated as consideration for a taxable supply for GST purposes. Therefore, you have to pay GST on the supply. You reduce the taxable value of the fringe benefit by the GST-inclusive amount of the employee contribution.
An employee contribution does not have any GST implications for you if either:
- the contribution is made through payment of an amount by the employee for some of the car's operating costs (for example, fuel)
- you are neither registered nor required to be registered for GST.
In certain circumstances, journal entries in your accounts can be an employee contribution.