Fringe Benefits Tax
The 2023 - 2024 FBT online declaration is now OPEN.
What do we mean when we say "days unavailable"?
A car is treated as available for use whilst it is under your custody and control, regardless of whether you or your associates use it. If you relinquish control of the car, the number of days usage can be reduced and thus save on FBT cost. The FBT year is 1 April to 31 March. If the car has been leased for only part of the FBT year, only count the days within the lease-term for which the car was not available. For example, a lease start date is 1 July, only count the days not available for private use from 1 July to 31 March.
A car is only deemed not available in either of the following scenarios:
- The car is garaged at the employer’s premises or;
- The car can be classified not available if all of the following conditions are met:
- The car is kept in safe storage away from your residence;
- You and your associates do not have custody or control of the car (keys are surrendered to employer);
- You and your associates are prohibited by the employer from using the car for private purposes; and
- The car is unavailable for the whole day (midnight to midnight).
Please note that one day is considered 12 am to 11:59 pm, so for example, if you relinquish custody of your car at 5 pm on the 5th of March and assume control again at 8 am on the 7th of March, only one day is considered unavailable.
When does days unavailable apply?
If your vehicle is a Tool of Trade or Pool Vehicle, which is never available for private use, then you are NOT required to submit an FBT Declaration. All other leases with any portion of private use are required to submit a declaration, where the vehicle has been unavailable for private use for a full 24-hour period midnight to midnight.
Examples:
- Control of the car is transferred to the employer by surrendering car keys or providing substantiation and;
- The car is parked at the employer’s premises and;
- The employer has placed a prohibition on private use of the car and consistently enforces that, perhaps by having a staff policy for car use.
- A car is in for major repairs over two nights. This includes a single 24-hour period midnight to midnight, constituting 1 day unavailable.
- Due to an overseas holiday where the car is left at the employer’s premises for 10 days (excluding drop off and pick up days) and keys are surrendered to the employer.
- Due to a collision where the car is not driveable or roadworthy and is in the workshop for body and mechanical repairs for 14 days (excluding drop off and pick up days), and the repairer will provide documentary evidence (such as an invoice).
- A car is in for routine servicing, but due to a delay in parts availability remains in the workshop for one afternoon, one full day and one morning. Documentary evidence is required for this 1 day unavailable.
When does days unavailable NOT apply?
The vehicle is available for private use which includes:
- Travel between home and work
- Parked near your residence
- Garaged at or near your residence
- You or your associates have effective control of the car (keys)
Examples:
- Car is in a workshop for routine servicing or maintenance not involving a full 24-hour holding period
- Car is available whilst you are away from work on holidays
- Car is available whilst you recover from work-related injury
- Being ill for several days and remaining at home whilst the car is still available for use by you or your associates
- Parked at an airport when you are travelling for business (unless the employer takes control of the keys at the airport).
Still have questions?
Read through our helpful FBT FAQ's or contact us and we can help find your answer.
What is Fringe Benefits Tax (FBT)?
The FBT regime was developed as a way of taxing non-cash benefits which are received in place of cash wages. The provision of an owned or leased car is an example of such a benefit. Without the FBT regime, employers could provide non-cash benefits to their employees free of tax. Employers have been made responsible for administering fringe benefits and for payment of the liability.
Does my employer pay the Fringe Benefits Tax?
FBT is a tax imposed on employers, however most employers pass on the cost of the tax to their employees as part of the employment agreement.
Do I have to submit a declaration?
You are only required to submit a Declaration if you have “Days Unavailable” to declare for the vehicle, during the time of your possession within the vehicle in the FBT year. If your vehicle is a Tool of Trade or Pool Vehicle which is never available for private use, then you are NOT required to submit a declaration. If you do not have any “Days unavailable” to claim, you are not required to submit a Declaration.
Why Do I need to lodge “days unavailable”?
FBT can be reduced if a car is not legitimately available for use during any of the 365 days of the FBT year (1 April - 31 March). In all cases a car does not need to be driven, only to be available to be driven by an employee or an associate (spouse, partner, family member etc.) Please check that your lodgement meet the “days unavailable” criteria.
What is the Statutory Formula Method of calculating Fringe Benefits Tax (FBT)?
One method of working out FBT is the Statutory Formula Method which takes the base value of the car and multiplies it by 20% over the number of days used during the FBT year. Employee’s post-tax contributions can be applied to offset the FBT liability. This method is applied where cars are mainly used for private purposes by a single driver, such as with a novated lease.
What is the operating cost method of calculating Fringe Benefit Tax (FBT)?
The Operating Cost Method is the other major way to work out FBT liability. It takes the total costs of running the car and multiplies it by the private use %. To determine private use % for a car, a log book must be kept for 12 weeks during a normal business period, and the rate determined can be used for the next 4 FBT years. This method is generally used where a car has a high business use %, such as operating leases for cars driven by employees travelling between client sites and their employer’s premises.