FAQ: What is the Statutory Formula Method of calculating Fringe Benefits Tax (FBT)?
What is the Statutory Formula Method of calculating Fringe Benefits Tax (FBT), and how does it work?
The Statutory Formula Method is a common method of calculating Fringe Benefits Tax (FBT). Using this method, FBT is calculated in two steps.
The FBT Taxable Value is calculated as follows:
FBT Taxable Value = FBT Capital Value* x Statutory Percentage** x (Number of days in the FBT year the vehicle is available for use / 365)***
*Vehicle price less on-road costs
**In the 2011/12 budget, the Federal Government changed the statutory percentage for calculating FBT, replacing the sliding scale statutory rates with the single rate of 20 percent. This reform applied to new vehicle contracts entered into after 7:30pm (AEST) on Monday 10 May 2011, and was phased in from 2011 to 2014 as follows:
Table 1: Statutory Percentages Kilometres travelled during the FBT year (1 April - 31 March) Statutory Percentage Existing contracts New Contracts entered into after 7.30pm 10 May 2011 1 April 2012 1 April 2013 1 April 2014 Less than 15,000km per annum 26%
20% 20% 20% 15,000 km to 24,999km per annum 20% 20% 20% 20% 20% 25,000 km to 40,000 km per annum 11% 14% 17% 20% 20% More than 40,000 km per annum 7% 10% 13% 17% 20%
***Full year availability assumed - 365 days
The FBT Liability is then determined using the FBT Taxable Value:
FBT Liability = FBT Taxable Value x Gross Up Factor (2.1463) x FBT Rate (49%)
If your Novated Lease begins or ends part-way through an FBT year, the Statutory Percentage is based on the kilometres you would've travelled if your driving patterns had remained the same throughout the year, and the FBT Liability is calculated as a pro-rata amount.