If you’ve entered a novated leasing arrangement with your employer or a finance company, it’s important to understand how your use of the vehicle will affect Fringe Benefits Tax (FBT).
Determining statutory percentage rates
The statutory formula option for car fringe benefits could be the most cost-effective approach if you are travelling longer distances or using the vehicle more frequently throughout the duration of the FBT year, as a flat rate of 20 per cent applies to all car fringe benefits arranged after 10 May 2011. You will need to estimate the number of kilometres travelled accurately, or use odometer readings, to avoid paying too much FBT.
If you entered a novated lease arrangement earlier than this date and there is a pre-existing commitment to buy a car at the end of the lease, a flat statutory rate of 20 per cent will still apply.
Other benefit calculations
Another means of assessing the taxable value of car fringe benefits is the operating cost method, which relates directly to the total costs of owning and operating the vehicle during the FBT year. This may be a preferable option for lessees who use novated lease vehicles less frequently, though log book records will need to be kept for at least a twelve week period to provide an accurate overview of operating costs.
How to salary sacrifice in Albany
Contact Fleet Network on 08 6555 3854 to find out how to salary sacrifice in Albany and Perth, or for more information about setting up a novated lease arrangement.