Car expenses - expense payments
Legislative reference: section 22External Link of the FBTAA.
With some exceptions, where you reimburse the operating expenses of an employee's own car according to the distance travelled in the car, an exempt benefit arises – for example, where expenses are reimbursed on the basis of an agreed number of cents per kilometre travelled.
These exempt benefits are a unique category of exempt benefits – they are the only exempt benefits that constitute assessable income in the hands of the employee. All other exempt benefits are both exempt from income tax in the hands of the employee to whom they are provided, and exempt from FBT.
Where the benefits are not exempt, some valuation concessions are available (refer to Reductions in fringe benefit taxable value).
The exemption is not available where the reimbursement of the car expenses relates to any of the following circumstances:
- transport to enable an employee to go on holiday (including remote area and overseas employment holiday transport)
- relocation transport
- transport to an employment interview or selection test
- transport to a work-related medical examination, work-related medical screening, work-related preventative health care, work-related counselling or migrant language training
- transport was provided after the employee had ceased to perform the duties of that employment.