Show download pdf controls
  • Fringe benefits tax and road tolls

    When you, as an employer, pay for an employee’s road tolls or allow the employee to use your electronic toll tag, you are providing them with a benefit. You need to determine whether you have to pay fringe benefits tax (FBT) on these benefits and how to record and value road tolls for FBT purposes. When referring to road tolls we mean road or bridge tolls.

    There is no separate FBT category for road tolls. The types of fringe benefits that may arise are either:

    • expense payment fringe benefits – where you pay for, or reimburse, an employee's expenditure on road tolls
    • residual fringe benefits – where you allow an employee to use your electronic toll tag.

    Fringe benefits may also arise when a road toll benefit is provided to an associate of your employee.

    Find out about:

    Road tolls incurred for business purposes

    Road tolls incurred solely for your business purposes are otherwise deductible and are not subject to FBT. You do not need to have employee declarations where the road tolls are incurred solely for business purposes and you own or lease the vehicle.

    Where you have a policy, which you enforce, that restricts the private use of cars, you can take those restrictions into account when determining whether road tolls are incurred for your business purposes. You must keep records, such as a logbook or diary records as referred to below, that substantiate the extent to which the benefit provided would have been 'otherwise deductible' to the employee.

    Exemptions which may apply

    An exemption may apply where an expense payment or residual fringe benefit arises as a result of road tolls provided to your employee. If an exemption applies, you do not have to pay FBT on the benefit, nor do you have to report the benefit on your employee's payment summary or through Single Touch Payroll. You are required to obtain records if you want to take advantage of the exemptions that reduce your FBT liability, even if an employee declaration is not required.

    See also:

    Minor benefits exemption

    If the value of the road toll is less than $300 and it would be unreasonable to treat the benefit as a fringe benefit, the minor benefits exemption will apply.

    Example 1: Minor benefits exemption applies to road tolls

    You let your employee use a pool car to travel to and from work on an ad-hoc basis during the FBT year. Your employee travels on a toll road on the way to and from work. An electronic toll tag (where the account is held in your name) is attached to the car and records all road toll expenditure for that car. Your employee takes the car home overnight 10 times during the FBT year (which is 20 tolls). The cost of each toll is $5.40 including GST.

    Each road toll recorded when your employee used the car for a private purpose is a residual benefit. However, the minor benefits exemption would apply to each residual benefit provided to the employee.

    If your employee started using the pool car to travel more frequently on the toll roads, the minor benefits exemption may no longer apply and the road tolls would be a residual fringe benefit with a taxable value that would not be reduced by the otherwise deductible rule.

    End of example

    Exempt motor vehicles

    An employee’s use of a vehicle may be exempt from FBT. There are several requirements to be satisfied under the FBT legislation in order for the vehicle to be exempt including that non-work related use is minor, infrequent and irregular.

    When an exempt vehicle (for example, a panel van or a utility truck) is not salary packaged, the Commissioner will accept that any road toll benefits you provide will not be subject to FBT. This is because exempt vehicles are generally provided for work travel of the employee and any private use is minor, infrequent and irregular. Any associated benefits such as road tolls would be considered to be for business purposes and otherwise deductible.

    Employee declarations are not required where the road tolls provided in exempt vehicles are incurred solely for business purposes. You are required to obtain records to support that the use of the road tolls was limited.

    Where an exempt vehicle is provided under a salary packaging arrangement, FBT would be payable on any road toll benefits that relate to private travel unless another exemption or concession applies. Salary packaged vehicles are generally used for private purposes in excess of the limitations on private use for an exempt vehicle. The provision of road toll benefits will not be subject to FBT where provided in relation to salary packaged exempt vehicles that meet the limited private usage requirement or where another exemption or concession applies. This maintains equity with other salary packaged vehicles which are not exempt under the FBT law.

    If the exempt vehicle is provided under a salary packaging arrangement, Example 2, Example 3 and Example 4 below show you how you can calculate the taxable value of road toll benefits. Example 1 above outlines where the minor benefits exemption would apply and the road toll benefit would not be subject to FBT even if the exempt vehicle is salary packaged.

    See also:

    Valuation options

    The following are practical options and examples of how you can determine the taxable value of fringe benefits relating to road tolls. For valuation purposes, road tolls are GST-inclusive and you may need to report these fringe benefits on your employee's payment summary or through Single Touch Payroll.

    Although we show you some options you can use to value road tolls provided to each employee, you can use any approach that gives you a reasonably based measure of the taxable value of these benefits.

    You must keep all records relating to the road toll benefits you provide, including how you calculated the taxable value of benefits. You must also keep records if you want to take advantage of various exemptions or concessions that reduce your FBT liability. The below examples show certain types of records you must obtain in order to substantiate your calculation of the taxable value based on the practical option you choose even if a declaration is not required.

    See also:

    Actual value

    The taxable value of road toll benefits is the amount that you pay for each road toll. You can use evidence such as receipts, electronic tag records, running sheets and employee attendance records to support your calculation.

    Example 2: Expense payment fringe benefits: employee's actual road toll expenditure

    Your employee incurs road toll expenditure when using both their own car as well as your car for private travel. The employee travels on a toll road on the way to and from work throughout the FBT year. The employee incurs the road toll expenditure by both cash payments made at a toll booth and by using an electronic toll tag (the road toll account is in the employee's name).

    You reimburse your employee's road toll expenditure on the production of receipts and electronic toll statements at the end of each month. The reimbursements of your employee's expenses will be expense payment fringe benefits and the taxable value is the amount you reimburse to your employee.

    End of example

     

    Example 3: Residual fringe benefit: employer's actual road toll expenditure

    An employee has a salary packaged car and on a working day travels from home to work and back on a toll road. The car is available for the employee's private use while at home, on weekends and while on holidays during which road tolls may also be incurred. The car is not used for business purposes and is available and used by the employee during the whole of the FBT year.

    An electronic toll tag (the account is held in your name) is attached to the car and records all road toll expenditure for that car. Each road toll recorded is a residual fringe benefit provided to the employee.

    All road tolls incurred while undertaking private travel are subject to FBT and the electronic toll statements provide sufficient details to identify the tolls relating to that car. The total cost of the road tolls shown on the electronic toll statements is the FBT taxable value.

    End of example

    Private use percentage

    You can use the private use percentage to determine the taxable value of road tolls.

    Diary records

    Where you keep a diary or similar record of road toll usage over a four week representative period which establishes the business and private usage of road tolls over that period, the private use percentage can be applied to road tolls for the entire FBT year.

    Other records

    You can use records such as car logbooks, odometer records and running sheets to record car travel and establish the business and private use of the car in an FBT year. You can apply the percentage of private usage established for an FBT year using these records to your total road tolls expenditure for the year. Logbooks which comply with the car fringe benefit operating cost method may only need to be completed every five years.

    Employee's usual road toll expenditure

    Where it is difficult for you to work out an employee's expenditure on road tolls for a pool car, you can determine the employee's usual private road toll expenditure in a normal working week and apply this to the employee's working year. You can use evidence such as electronic tag records, running sheets and employee attendance records to support your calculation.

    Example 4: Pool car: employee's actual road toll expenditure

    An employee has a salary packaged car and on work days travels from home to work and back on a toll road. During the day, the car is made available as a 'pool car' and is used by a number of employees.

    The car is available for the employee's private use while at home, on weekends and while on holidays, during which time road tolls may also be incurred. An electronic toll tag (the account is held in your name) is attached to the car and records all road toll expenditure for that car. Each road toll recorded in relation to an employee is a residual benefit and you need to determine the taxable value of residual fringe benefits provided to the employee who has entered into the salary packaging arrangement.

    You need to review the information available to confirm which road tolls are incurred during the 'pool car' period, for example on the electronic toll statement. These road tolls can be subtracted from the total road toll expenditure as they are incurred for business purposes and are otherwise deductible.

    You can use factors such as the days and times the employee generally arrives at work and returns home; the days the employee is on holidays or which road tolls would generally be incurred on the private trip home to determine when the road tolls are incurred for private purposes.

    The taxable value is the total expenditure on road tolls for private travel.

    End of example

     

    Example 5: Pool car: private use percentage

    Assume the same facts as in Example 4, however the employer keeps records such as car log books which establish a business use percentage for the car. The percentage of business use is 75%.

    The percentage of private use of a car for a particular year is the difference between 100 and the percentage of business use. In this case, the percentage of private use is 25%.

    The FBT taxable value of the road toll expenditure is the total cost of the road tolls shown on the electronic toll statements multiplied by the percentage of private use.

    End of example

     

    Example 6: Pool car: employee's usual road toll expenditure

    You have a number of cars and each car is used as a 'pool car' during the workday. After the workday has finished, your employees can take a car home and back to work the next day. You have a policy (which you enforce for all your cars) that the only private travel that is permitted is this private travel to and from work. The car is not an exempt vehicle.

    Some employees travel on a toll road on the way to and from work. Electronic toll tags (accounts held in your name) are attached to each of your cars which record all road toll expenditure for each car.

    During the work day, because of your car usage policy, each car is only used for business purposes and any road tolls incurred are otherwise deductible.

    Because different employees are using different cars on different days and at different times, it would be difficult for you when examining, for example, electronic toll statements, to determine which trips were for private travel.

    In this situation, you may be able to determine, for each employee who has regular access to a car for private use, what would be a normal to and from work road toll expenditure in a normal work week and apply this to the employee's working year.

    Using this information and supporting evidence you can determine the total private road toll expenditure for all employees over the full year. This amount would be used as the taxable value.

    Supporting evidence may include electronic tag records, running sheets and employee attendance records.

    End of example

    See also:

      Last modified: 30 Aug 2019QC 19372