ATO Interpretative Decision

ATO ID 2004/385

Fringe Benefits Tax

Car fringe benefits: cost basis (operating cost) method - log book records not maintained
FOI status: may be released
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Issue

Can an employer use the operating cost method to value the car fringe benefits in relation to a particular car, under subsection 10(2) of Fringe Benefits Tax Assessment Act 1986 (FBTAA), where a log book has not been maintained?

Decision

Yes. An employer can use the operating cost method of valuing all of the car fringe benefits for a particular car, under subsection 10(2) of the FBTAA, where a log book has not been maintained. However, there will be no reduction in the operating cost of the car for any business journeys that were made.

Facts

The employer provides a car to an employee which is used for predominantly private purposes.

The employer has never maintained a log book in respect of this car.

The employer elects to use the operating cost method to calculate the taxable value of the car fringe benefits in relation to this car.

The employee made a recipient's payment in relation to this car.

Reasons for Decision

Under subsection 10(1) of the FBTAA an employer may elect to use the cost basis (or operating cost) method to calculate the taxable value of all of the car fringe benefits that relate to a particular car.

The operating cost method under subsection 10(2) of the FBTAA makes provision for a reduction in the taxable value of the car fringe benefits in relation to a car where there has been business use of the car. However, under section 10A of the FBTAA, the employer is not entitled to make such a reduction unless a log book has been maintained.

Where a log book has not been maintained the taxable value of a car under the operating cost method will be the total operating costs of the car reduced by any recipient's payment. The employer is entitled to use the operating cost method of calculating the taxable value of the car fringe benefits but will be prohibited from making any reduction in the taxable value for any business use of the car.

Note: Regard should be had to subsection 10(5) of the FBTAA. If the employer elects to use the operating cost method and this results in a higher taxable value than under the statutory formula method, the election will be deemed not to have been made. As such, the taxable value would then be calculated under the statutory formula method.

Amendment History

Date of Amendment Part Comment
11 March 2026 Business Line Updated to correct business line

Date of decision:  31 March 2004

Year of income:  Year ended 31 March 2005

Legislative References:
Fringe Benefits Tax Assessment Act 1986
   subsection 10(1)
   subsection 10(2)
   subsection 10(5)
   section 10A

Keywords
Fringe benefits tax
Car fringe benefits
FBT log book records
FBT operating cost
FBT car

Siebel/TDMS Reference Number:  3758771; 1-62TN4H6; 1-CXDTI3E

Business Line:  Superannuation and Employer Obligations

Date of publication:  7 May 2004
Date reviewed:  2 March 2026

ISSN: 1445-2782

history
  Date: Version:
  31 March 2004 Original statement
You are here 11 March 2026 Updated statement

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