FBT Car Benefit Calculator

How the statutory formula works

Taxable value = cost of the car (GST-inclusive) × the statutory fraction × the proportion of the year the car was available, less any employee contribution. The fraction is 20%, and since 1 April 2023 it has been 20% for every distance band.

That change is worth knowing, because it removed distance from the calculation. Before 1 April 2023 the fraction fell as the car was driven further, which meant a car driven under 15,000 kilometres carried a higher taxable value than the same car driven over 40,000. The old bands were 0.26, 0.20, 0.11 and 0.06. Driving further no longer reduces the FBT, and this calculator therefore does not ask for kilometres.

The 20% is applied to the original cost of the car, not its depreciated value, and not its running costs. A cheaper car driven hard and an expensive car driven rarely are not treated the same way, and the expensive one carries the higher taxable value.

Statutory formula vs operating cost

The statutory formula method ignores actual running costs entirely. The operating cost method instead takes the total running costs of the car and applies the business-use percentage, which means it needs a logbook and records of every running cost.

The operating cost method can produce a lower taxable value for a low-kilometre or efficient car, or where business use is low. It is more work, and you can switch methods from year to year, so it is worth checking both before committing to one.

Employee contributions reduce FBT

If the employee contributes towards the cost of the car (either by paying running costs or making a post-tax contribution), that amount reduces the taxable value dollar for dollar.

Contributions must be paid from after-tax income. Salary sacrificing the contribution does not reduce the taxable value.

GST and the two gross-up rates

The taxable value is grossed up before the 47% rate is applied, and which gross-up applies depends on whether the employer can claim GST credits on the car costs. Type 1 applies where credits are available and uses a factor of 2.0802; Type 2 applies where they are not and uses 1.8868.

The difference is material rather than cosmetic: the same taxable value produces roughly 10% more FBT under Type 1. A practice that is not registered for GST, or that provides the car through an entity that cannot claim the credits, will be on the lower factor.

The FBT year is not the financial year

Fringe benefits tax runs from 1 April to 31 March, not 1 July to 30 June. A car provided in May falls in the FBT year that began the previous April, which is a different period from the income year the practice reports on.

FBT returns are generally due on 21 May for the year ended 31 March, or 25 June if lodged through a registered tax agent. The rate is also fixed rather than indexed: it has been 47% since 1 April 2017.

Records the ATO expects

Keep the invoice showing the cost of the car, the dates it was available to the employee and the dates it was not, and any declaration the employee signs about private use or contributions. For the operating cost method, also keep the logbook and the running cost records.

An employee contribution is only effective if it is documented and actually paid. A contribution that appears in the arrangement but never leaves the employee's pay is not a contribution for FBT purposes.