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

The current FBT (Fringe Benefits Tax) year is finishing soon, on 31 March 2027. 

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 - 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 at $18,000. 

Please be aware that you can only claim depreciation deductions for $69,883 on motor vehicles in the 2027FY.

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 Fringe Benefits Tax can be more than the deductions on luxury cars.