Car and other travel benefits
References to employers and employees equally apply where the benefit is provided by a third party under an arrangement with the employer, or is provided to an associate of the employee.
An employer may provide a car fringe benefit if they make a car they own or lease available to an employee for their private use.
For FBT purposes, a car is:
- a sedan, station wagon, four-wheel drive vehicle, panel van or utility (excluding panel vans and utilities with a carrying capacity of one tonne or more)
- any other goods-carrying vehicle with a carrying capacity of less than one tonne
- any other passenger-carrying vehicle designed to carry fewer than nine passengers.
There are some circumstances where car benefits are exempt from FBT. For example, an employee’s private use of a taxi, panel van or utility designed to carry less than one tonne, is exempt from FBT if their private use is limited to:
- travel between home and work
- travel incidental to travel in the course of performing employment-related travel
- non-work-related use that is minor, infrequent and irregular (for example, occasional use of the vehicle to remove domestic rubbish).
Other benefits you provide relating to the use of a car, whilst not constituting a car fringe benefit, may instead constitute an expense payment or residual fringe benefit. For example:
- if you pay for, or reimburse, an employee’s expenditure on road tolls, you may be providing an expense payment fringe benefit
- if you allow an employee to use your electronic toll tag, you may be providing a residual fringe benefit
- if you allow private use of a motor vehicle that is not a car, you may be providing a residual fringe benefit.
A car is taken to be available for the private use of an employee on any day that they or their associates:
- use it for private purposes
- could use it for private purposes.
If a car is garaged at or near an employee’s home, it is taken to be available for the employee’s private use, regardless of whether or not the employee has permission to use the car privately. Similarly, where the place of employment and residence are the same, the car is taken to be available for the private use of the employee.
As a general rule, travel to and from work is private use of a vehicle.
Working out the taxable value of a car fringe benefit
To calculate a car fringe benefit, an employer must work out the taxable value of the benefit using either the:
- statutory formula method (based on the car’s cost price)
- operating cost method (based on the costs of operating the car).
Car parking benefits
A car parking fringe benefit may arise if an employer provides car parking to an employee and all the following conditions are satisfied:
- the car is parked at premises that are owned or leased by, or otherwise under the control of, the provider (usually you as the employer)
- the car is parked for a total of more than four hours between 7.00am and 7.00pm on any day
- the car is owned by, leased to, or otherwise under the control of, an employee, or is provided by you
- the parking is provided in respect of the employee's employment
- the car is parked at or near the employee's primary place of employment on that day
- the car is used by the employee to travel between home and work (or work and home) at least once on that day
- there is a commercial parking station that charges a fee for all-day parking within a one-kilometre radius of the premises on which the car is parked
- the commercial parking station fee for all-day parking is more than the car parking threshold
- at the beginning of the fringe benefit tax (FBT) year, the commercial parking station fee for all-day parking was more than the car parking threshold.
The car parking threshold is indexed in line with the consumer price index (CPI) and is published each year in a taxation determination, usually in April.
In some circumstances car parking benefits provided to employees are exempt from FBT. For example, car parking provided by small business employers other than in a commercial car park is generally exempt. The small business car parking exemption section provides more information.