What is a car Fringe Benefit?
A car fringe benefit commonly arises when an employer makes a car they own or lease available for the private use of an employee. If you conduct your business through a company or trust, you may be an employee of the company or a trust. A car is made available for private use by an employee on any day the car:
is used for private purposes by the employee or associate
is not at your business premises, and the employee is permitted to use it for private purposes
is garaged at their place of residence, regardless of whether they have permission to use it privately.
CALCULATING THE TAXABLE VALUE You can calculate the taxable value of a car fringe benefit using either a statutory formula or operating cost method. EXEMPT CAR BENEFITS WORK RELATED TRAVEL IN COMMERCIAL CARS A car benefit will be exempt where the vehicle is a taxi, panel van, utility or other road vehicle designed to carry a load, other than passengers of less than one tonne, and the employee’s private use is limited to incidental or minor work-related travel such as between home and work that is infrequent and irregular. CARS USED FOR EMERGENCY SERVICES Cars used for emergency services which are garaged or kept at or near an employee’s residence are exempt car benefits, where the car used is a police, ambulance or firefighting services vehicle; is fitted with flashing warning lights and a siren and has exterior markings which indicate its use. CARS SUPPLIED BY PERSONAL ENTITIES A personal service entity is unable to deduct car expenses from more than one car used by an individual. The second car benefits are exempt in relation to an FBT year. Want to know more? For further information, contact our office today
This article is provided as general information only and does not consider your specific situation, objectives or needs. It does not represent accounting advice upon which any person may act. Implementation and suitability requires a detailed analysis of your specific circumstances.