FAQ – Your top FBT questions answered

If your business provides work vehicles to employees for private use – then it is liable for Fringe Benefits Tax (FBT). 

But with so many changes to the FBT laws over the past five years, it’s possible you could now be paying too much just by continuing to use your old FBT method.

• Q. Which method should I use to calculate my fleet Fringe Benefits Tax?
  A. You have two choices: the statutory formula method, which is based on the car’s cost price; and the operating cost method, which is based on the costs of operating the car. EROAD recommends the operating cost method because it tends to be a more accurate way of recording the amount of business verses private usage for a vehicle.
  
  
• Q. Which vehicles do you need to pay FBT on?
  A. You need to pay FBT on vehicles such as cars, vans, 4WDs, utes or any goods-carrying vehicle that weighs less than one tonne or can carry up to nine people if they are made available to employees for private use.
  
  
• Q. How can I minimise my fleet FBT?
  A. Typically, using the operating cost method is the most cost effective way to calculate your FBT – particularly when using an electronic FBT Logbook as it can more accurately calculate the amount of business-related verses private use of a vehicle. However, you need to keep accurate, up-to-date records over a 12 week period. This is then valid for five years - but only provided there is no meaningful change in the business’ pattern of use.

  An additional advantage of the operating cost method is that it provides for a lower taxable value when employees use their cars regularly for work purposes i.e. the less a car is used privately, the less you pay in fleet FBT.