Money
Issue No. 16 - April/May 2004
Taxing Times
Car fringe benefits driving FBT revenue
Salary—packaged cars provided to employees remain the most popular form of fringe benefits.
It is understood that car fringe benefits comprised around one—half of the $3.5 billion of FBT revenue collected by the Australian Taxation Office last year.
While many employees successfully—packaged their cars, a lesser number took prudent steps to minimise the FBT associated with their car fringe benefit.
With forward planning prior to 31 March, you can achieve FBT savings.
There are several ways in which savings can be realised:
- Employers should plan to work with their employees to determine whether they are on the cusp of the next kilometre threshold used to calculate FBT pursuant to the statutory method. Where this is the case, employees should utilise their vehicle in advance of this date and increase the kilometres driven. Savings of thousands of dollars can arise in such circumstances.
- Employees should be aware that all kilometres driven up to 31 March 2004 are to be considered when calculating the associated FBT.
- Employees should collate their invoices and receipts to substantiate related car expenses such as car insurance, maintenance and repairs.
- Where these expenses have been incurred by the employee, the costs can be used to reduce the taxable value of the car fringe benefit, and save the employee and employer additional dollars.
It is in the best interests of employees to take these simple steps to reduce their associated car fringe benefit FBT liability, thus reducing any potential impact of reportable fringe benefits.
A few simple steps can have a large impact for both the employer and employee. Although the liability for FBT remains with the employer, the grossed—up value of fringe benefits is used to calculate reportable fringe benefits
of employees. This grossed—up value is used to compute a number of sur...
