Taxation Determination
TD 94/74
Fringe benefits tax: where an employer purchases a car free of sales tax, or leases a car which has been purchased by the lessor free of sales tax, how is the sales tax amount determined for the purposes of the statutory formula method of calculating car fringe benefits?
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FOI status:
may be releasedFOI number: I 1217775| This Determination, to the extent that it is capable of being a 'public ruling' in terms of Part IVAAA of the Taxation Administration Act 1953 , is a public ruling for the purposes of that Part. Taxation Ruling TR 92/1 explains when a Determination is a public ruling and how it is binding on the Commissioner. Unless otherwise stated, this Determination applies to years commencing both before and after its date of issue. However, this Determination does not apply to taxpayers to the extent that it conflicts with the terms of a settlement of a dispute agreed to before the date of issue of the Determination (see paragraphs 21 and 22 of Taxation Ruling TR 92/20). |
1. Under the statutory formula method of calculating car fringe benefits in section 9 of the Fringe Benefits Tax Assessment Act 1986, the base value of the car is the amount which the employer or the lessor could reasonably have expected to pay if the car had not been purchased free of sales tax. The base value will be the amount actually paid plus the notional amount of sales tax which would otherwise have been payable.
2. This Office will accept various methods to arrive at a figure for the notional sales tax, including;
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- where the amount of sales tax which would otherwise have been payable is disclosed in the purchase documentation, that amount
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- the amount calculated by multiplying the tax-inclusive Recommended Retail Price (RRP) of the car by the applicable percentages (rounded) set out in the table below:
3. The sales tax luxury car limit referred to in paragraph 2 is the Recommended Retail Price above which the vehicle is taxed at the luxury car rate specified in the sales tax legislation. It is not the same as the motor vehicle depreciation limit used for income tax purposes.
4. These rates apply to cars purchased during the period 1 April 1993 to 31 March 1995.
- 1.
- An employer purchases a business car on 1 September 1993 for $20,000, claiming a sales tax exemption on the purchase. The tax-inclusive Recommended Retail Price of the car is $26,400. The notional sales tax amount is 11% of $26,400, ie., $2,904. The base value of the car (assuming there were no non-business accessories fitted) will be $22,904.
- 2.
- Assume the same facts as above except that the employer is unable to ascertain the tax-inclusive Recommended Retail Price of the car. The employer may calculate the notional sales tax as 16% of the purchase price, ie., $3,200. In this case the base value will be $23,200.
Commissioner of Taxation
1 September 1994
Previously issued as Draft TD 94/D72.
References
ATO references:
NO FBT Cell 30/82A
Subject References:
fringe benefits
car fringe benefits
statutory formula method of valuation
sales tax exemptions
Legislative References:
FBTAA 9
| Date: | Version: | Change: | |
| You are here | 1 September 1994 | Original ruling | |
| 27 September 1995 | Withdrawn |