As a rule, if fringe benefits tax (FBT) applies to your employee's private use of a car or eligible commercial vehicle, and you pay their road or bridge tolls, the tolls are also subject to FBT.
FBT also applies if you pay the tolls of an employee's associate, such as their partner.
You don't pay FBT on road or bridge tolls if your employee's use (or their associate's) is:
You don't have to pay FBT on tolls if both of the following apply:
- The total value of the road or bridge toll for an employee over the FBT year is less than $300.
- It would be considered unreasonable to treat the benefit as a fringe benefit – for example, because the toll payments are infrequent and irregular.
This is called the minor benefits exemption.
Example: road tolls as a minor benefit
Tom lets his employee, Sandi, use a pool car to travel to and from work on an ad hoc basis.
Sandi travels on a toll road on the way to and from work. The business's electronic toll tag is attached to the car.
Sandi 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. As the cost is only $108, and the tolls are infrequent and irregular, Tom does not have to report on or pay FBT for paying Sandi's road tolls.End of example
If road or bridge tolls you've paid are subject to FBT, you need to:
- work out the taxable value of the fringe benefit
- calculate how much FBT to pay
- lodge your FBT return, completing the label for
- an expense payment fringe benefit if you reimburse an employee's toll
- a residual fringe benefit if you allow an employee to use your electronic toll tag
- pay the FBT amount
- check if you should report the fringe benefit through Single Touch Payroll (or on your employee's payment summary).
You can use any approach to work out the taxable value of road and bridge tolls as long as:
- it gives you a reasonably based measure
- you include GST in the cost
- you keep all records for the toll benefits you provide, including how you calculated the taxable value of benefits.
Some methods you can use to work out the taxable value of tolls are:
You can also apply these methods to work out the taxable value of tolls for private use of pool cars.
To work out the taxable value of road or bridge toll benefits, you can simply use the amount that you pay for each toll.
Support your calculation with evidence such as receipts, electronic tag records, running sheets and employee attendance records.
Example: employee's actual road toll expenditure
Jonty has an electronic toll tag on his car, which he drives to and from work. Sometimes he uses his employer's car to drive to and from work, and pays cash for tolls.
At the end of each month, Jonty provides toll receipts and electronic toll statements to his employer, who reimburses his expenditure.
These reimbursements are expense payment fringe benefits. The taxable value is the amount the employer reimburses.End of example
You can use the private use percentage to determine the taxable value of bridge and road tolls. The percentage may be calculated from diary records, a logbook or similar records.
Keep a diary (or similar records) over a representative period of 4 weeks or more. You can use this to establish the business and private usage of road or bridge tolls over that period. You can then apply the percentage of private use to your tolls for the entire FBT year.
You can use records such as car logbooks, odometer records and running sheets to record car travel. Use these records to work out the business and private usage of a car over an FBT year.
You can then apply the percentage of private use to your tolls for that car for the entire FBT year. If you use a logbook that complies with the car fringe benefits operating cost method, you may only need to be complete one every 5 years.
If you have a pool car that is used by your employees for both business and private purposes, you can calculate the taxable value of tolls based on:
- actual value
- private use percentage
- an employee's usual weekly toll expenditure.
Example: Pool car tolls – actual value or private use percentage
BusinessCo provides its employee, Anwar, with a salary packaged car.
- On work days, Anwar travels from home to work and back on a toll road.
- During the day, the car is available as a pool car for use by other employees. Often their use of the car involves tolls.
- The car is available for Anwar's private use while at home, on weekends and on holidays. During these times he occasionally has road tolls.
- The car has an electronic toll tag in BusinessCo's name. The tag records all road toll expenditure for the car, which is paid by BusinessCo.
The road tolls during the 'pool car' period are incurred for business purposes and no FBT is payable.
The tolls during Anwar's private use of the car are a residual fringe benefit.
Actual value method
BusinessCo can use the electronic toll statement to work out the actual value of the fringe benefit provided to Anwar, using either of these approaches:
- Work out which tolls are incurred during the 'pool car' period, and subtract this amount from the total road toll expenditure. The balance is the taxable value of the fringe benefit provided to Anwar.
- Work out which tolls are incurred during Anwar's private use of the car. To do this, BusinessCo looks at things like the time Anwar generally arrives at work or returns home, the tolls he would incur on his trips to and from work, and the days he is on holidays.
Private use percentage
BusinessCo keeps a car log book (or other similar records). The log book shows that the percentage of business use of the car is 75%. This means the private use by Anwar is 25%.
BusinessCo calculates the taxable value of the fringe benefit provided to Anwar as 25% of the company's total expenditure on tolls for the car.End of example
If it's difficult to work out an employee's expenditure on tolls for a pool car, you can:
- determine the employee's usual private toll expenditure in a normal working week
- apply this to the employee's working year.
Use evidence such as electronic tag records, running sheets and employee attendance records to support your calculation.
Pool car tolls – estimating from usual toll expenditure
AbCo has a number of pool cars for employees to use during business hours.
- After the work day has finished, AbCo allows employees to take a car home and bring it back the next day.
- AbCo has a strict policy that the only private travel permitted is to and from work.
- Some employees travel on toll roads on the way to and from work.
- The cars have electronic toll tags in AbCo's name. The tags record all road toll expenditure for the cars, which is paid by AbCo.
Because different employees use different cars on different days and at different times, it's difficult for AbCo to calculate, from the electronic toll statements, which trips are for private travel.
- works out, for each employee, the road toll expenditure from their private use of a pool car in a normal working week.
- AbCo works this out using electronic toll statements, running sheets and employee attendance records
- multiplies the normal weekly tolls expenditure by the number of weeks worked by the employee during the year.
The result is the taxable value of the tolls provided to the employee by AbCo during the FBT year.End of example
If you pay FBT, the:
- FBT you pay is tax deductible
- private tolls for which you pay FBT are tax deductible.