𝐇𝐨𝐰 𝐝𝐨 𝐲𝐨𝐮 𝐜𝐚𝐥𝐜𝐮𝐥𝐚𝐭𝐞 𝐲𝐨𝐮𝐫 𝐂𝐚𝐫’𝐬 𝐅𝐫𝐢𝐧𝐠𝐞 𝐁𝐞𝐧𝐞𝐟𝐢𝐭𝐬 𝐓𝐚𝐱?

The current FBT (Fringe Benefits Tax) year is finishing soon, 31 March 2023. I thought I would discuss the most common fringe benefits, motor vehicles. 

There are two methods to calculating your Fringe Benefits Tax on motor vehicles.  They are: Statutory Formula and Operating Costs. 

𝐒𝐭𝐚𝐭𝐮𝐭𝐨𝐫𝐲 𝐅𝐨𝐫𝐦𝐮𝐥𝐚 is based on the value of the vehicle when it was purchased, including GST.    The statutory rate is 20%.  For example, if your business owns a BMW acquired for $90,000, your fringe benefit is $18,000.  The FBT debt is calculated on $18,000. 

Please be aware that you can only claim depreciation deductions for $64,741 (or instant asset write-off currently, Mar 2023) on motor vehicles.

The best way to reduce your FBT on your motor vehicles is by using the 𝐎𝐩𝐞𝐫𝐚𝐭𝐢𝐧𝐠 𝐂𝐨𝐬𝐭𝐬 method for calculations.  You will need to complete a log book to work out the business percentage use.  You will calculate all running and ownership costs related to the motor vehicles.  The private use percentage is the value of your fringe benefit and the value used to calculate your FBT debt.

Sometimes the FBT can be more than the deductions on luxury cars.