FAQ: Why does the July 2013 change to Fringe Benefits Tax (FBT) matter?
Why does the July 2013 change to Fringe Benefits Tax (FBT) matter?
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The July 2013 changes to the Fringe Benefits Tax (FBT) affect the vast majority of employees who are provided with a company car or the option of a novated lease, as well as their employer.
The removal of the statuatory formula method of calculating FBT means that going forward FBT will be calculated based on the actual personal use percentage of vehicle, as opposed to the 20% personal usage (80% business use) assumed under the statuatory formula method.
For the majority of employees this change will result in FBT being calculated on an increased percentage of personal use, leading to increased Fringe Benefit Tax being payable by their employer in relation to their company-provided or novated leased vehicle. Improtantly, under a novated lease, and sometimes under a company car arrangement, any FBT costs incurred by an emloyer are passed on to employees.
In addition, employers and employees will have to revert back to an onerous system of logbooks to track running expenses and business kilometres, causing additional hassle and potential additional operating costs.