Taxation Determination

TD 94/26

Fringe benefits tax: what records of distance travelled are acceptable if the employer did not keep the opening and closing odometer readings for a car for the statutory formula method of calculating car fringe benefits in section 9 of the Fringe Benefits Tax Assessment Act 1986 ?

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FOI status:

1. The statutory formula method for calculating car fringe benefits requires a determination of the total kilometres travelled by a car during the year. Section 132 requires an employer to keep records that explain the calculation of the employer's fringe benefit tax liability. The best way to do this in relation to the distance travelled by a car is by keeping a record of the odometer readings at the beginning and end of the year of tax.

2. If the employer has failed to record odometer readings for the car then appropriate evidence which records two separate odometer readings which are close to the beginning and end of the FBT year is acceptable.

For example : -

*

vehicle purchase or sale invoices showing an odometer reading;

*

repair invoices showing an odometer reading;

*

service records showing an odometer reading;

*

any document used for registration purposes which shows an odometer reading (e.g. pink slips);

*

entries in employer log books showing an odometer reading close to the beginning and/or end of the FBT year (as long as the entry is dated, has name and signature of person making the entry and the odometer reading);

*

fleet management or oil company charge cards which show an odometer reading on account statements;

*

if a new car was purchased and no odometer reading was recorded on the vehicle purchase invoice, zero kilometres is acceptable as being the opening odometer reading.

Example

Company A purchases a new motor vehicle on 1/4/93 for $25,000. No odometer reading was recorded on the purchase invoice. On 5/4/94 the car has its annual service. The odometer reading on the service invoice is 20,350 kilometres. Assuming that zero kilometres was the opening odometer reading, the motor vehicle has travelled 20,350 kilometres in 370 days. The annualised number of kilometres travelled for the 1993/4 year is as follows : -

20,350 * 365/370 = 20,075 kilometres


Therefore the statutory fraction will be 18%.

The taxable value of the car fringe benefit will be $4,500 (ie 18% of $25,000).

Commissioner of Taxation
7/4/94

Previously issued as Draft TD 93/D224

References

ATO references:
NO HOB/TD10

Related Rulings/Determinations:

MT2021

Subject References:
fringe benefits tax;
car benefits;
odometer readings;
statutory formula method of valuation

Legislative References:
FBTAA s9