Fringe benefits tax and road tolls
This information explains the types of benefits that arise in relation to employee road tolls, when these benefits are exempt from fringe benefits tax (FBT) and outlines methods you can use to record and value road tolls for FBT purposes. When referring to road tolls we mean road or bridge tolls.
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 in this case.
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. When you 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 on these benefits.
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.
Example 1: 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.
Example 2: Residual fringe benefit: employer's actual road toll expenditure
An employee has a salary-sacrificed 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
Does an exemption apply?
An exemption may apply where you provide a road toll benefit 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.
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 3: 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.
End of example
Exempt car benefits
When an exempt car (for example, a panel van or a utility truck) is not salary sacrificed, then any road toll benefits you provide will not be subject to FBT and employee declarations are not required.
If the exempt car is salary sacrificed, FBT is payable on road tolls incurred while undertaking private travel. This is to maintain equity with other salary sacrificed cars which are not exempt under the FBT law. Examples 1 and 2 above show you how you can calculate the taxable value of road toll benefits in these circumstances.
The following are practical options and examples of how you can determine the taxable value of fringe benefits provided in relation 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.
Although we show you some options you can use to value the amount you spend on road tolls for each employee, you can use any approach that gives you a reasonably based measure of the taxable value of these benefits.
The taxable value of road toll benefits is the amount that you pay for each road toll.
Private use percentage
You can use the private use percentage to determine the taxable value of road tolls.
Where you keep a diary or similar record of road toll usage over a four week representative period which establishes the business/private usage of road tolls over that period, the private use percentage can be applied to road tolls for the entire FBT year.
You 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 sacrificed 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 sacrifice 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.
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.
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
This fact sheet explains the types of benefits that arise in relation to employee road tolls, when these benefits are exempt from fringe benefits tax (FBT) and outlines methods that you can use to record and value road tolls for FBT purposes.