A car fringe benefit arises when an employer makes a car available for an employee’s private use.
When Home-to-Work Travel is Business Use
| Condition Met | FBT Outcome |
| Employee is on-call and starts work after receiving a call | No FBT |
| Employee has itinerant employment (travels to multiple locations) | No FBT |
| Car is taken home for business travel next morning | No FBT |
| Stops for work task on way to work | Yes, FBT applies |
Eligible Vehicles for FBT Exemption
| Vehicle Type | Eligibility Criteria |
| Single cab ute | Automatically eligible |
| Dual cab ute | Load capacity ≥ 1 tonne or not primarily for passengers |
| Panel van / Goods van | Eligible |
| Modified vehicle (e.g., hearse) | Permanent modification required |
| Taxi | Eligible |
| 4WD vehicle | Load capacity ≥ 1 tonne or 9+ passengers |
| Other vehicles | Load capacity ≥ 1 tonne or 9+ passengers |
Uses Eligible for Exemption (Eligible Vehicles Only)
| Use Type | FBT Applies? |
| Travel between home and work | No |
| Travel incidental to duties | No |
| Minor, infrequent, irregular private use | No |
| Use by associate (if minor/infrequent) | No |
Leased Cars – FBT Implications
| Lease Type | Treatment |
| Bona fide lease (e.g., novated lease) | Car fringe benefit – FBT based on taxable value |
| Not bona fide lease | Property or residual benefit – may result in higher FBT |
Valuation Methods
Employers providing vehicles to staff for private use must account for the motor vehicle fringe benefit. There are two valuation methods:
– Statutory Formula Method:
| Statutory Formula Rate | 20% |
– Operating Cost Method: Based on the actual operating costs and the percentage of private use. Requires a logbook.
Tip for Employers: Ensure you maintain detailed records of usage and select the most tax-effective method.
Claiming Tax Deductions
| Expense | Deductible? |
| FBT paid | Yes |
| Car expenses for private use (FBT applied) | Yes |
| Car expenses for business use | Yes |
Car Parking Fringe Benefits
| Daily Threshold | $10.77 |
| Definition | Within 1km of commercial parking > $10.77,
parked >4 hrs between 7am–7pm |
| Exemptions | Small business, minor benefits < $300, |
Electric & Plug-in Hybrid Vehicles
- Electric Vehicles (EVs) may be FBT exempt if:
– First held and used from 1 July 2022, and
– Under the Luxury Car Tax threshold for fuel-efficient vehicles. - Plug-in hybrid EVs (PHEVs) will lose this exemption from 1 April 2025, unless under a pre-existing financial commitment.
