Car fringe benefits remain a key focus of our compliance activities, with many employers incorrectly calculating their FBT liability on vehicles provided to employees. Remember, if your client provides a car to employees and the car is available for private use, FBT may apply.
Ask your clients the right questions to help them stay on track so they can meet their FBT obligations and avoid costly errors.
Is the vehicle they provide a 'car'?
A 'car' is defined as:
- a sedan or station wagon
- a goods-carrying vehicle with a carrying capacity of less than one tonne (such as a panel van, many 4-wheel drives and some utes)
- a passenger-carrying vehicle designed to carry fewer than 9 passengers.
Is the car being used privately?
Is the car used or made available for private use to employees, their families or associates. This might include things like (but not limited to):
- school pick-ups or drop-offs (even if on the way to or from work)
- running personal errands
- garaging the car at or near the employee's home (even for security reasons)
- weekend recreational trips
Are they keeping adequate records?
Whether your clients allow private use of a car or not, they need to keep records to support their FBT position and how the taxable value of a car fringe benefit was calculated.
If your client is using the operating cost method, they need to keep additional records (PDF, 414KB)This link will download a file such as logbooks and odometer readings.
If they're using the statutory formula method, ensure they have records such as purchase records, invoices, receipts and lease documents.
How can you help them get it right?
Regularly checking in with your clients can help to identify potential FBT errors before they become costly issues.
Ask your clients:
- Do they allow work cars to be used by employees for private purposes?
- Do they understand what constitutes private use for FBT purposes?
- What are their vehicle specifications and is it classified correctly for FBT purposes?
- Are they incorrectly treating private use as business use?
- Are they keeping logbooks that clearly demonstrate the use of the car?
See our website for more information about How FBT applies to cars.