FBT is payable on the taxable value of a fringe benefit. The taxable value of car fringe benefits can be calculated using the statutory formula method or the operating cost method. The choice of method can be made on a car-by-car basis each FBT year.
In deciding what method to use to calculate the taxable value of car fringe benefits, entities may consider which method:
- is easier to administer (generally this is the statutory formula method)
- results in the lower FBT liability.
A separate calculation is required for each car held during the FBT year. For example, two separate calculations will be required when a car is replaced by another during the year. However, only one calculation is required for each car, even if the car is driven by more than one employee during the year.