Fringe Benefit tax
Under the Australian Tax Office's rules, every dollar made as a post tax deduction reduces the FBT Taxable Value by the same.
As the owner of a novated lease vehicle, you are required to pay Fringe Benefit Tax (FBT). The amount you are required to pay will depend on the total cost of the car and the number of kilometres you travel in any one FBT year (April to March).
The amount of FBT you are required to pay is calculated by multiplying the 'capital cost' of the car by the 'statutory fraction' by the number of days in the year the car was available for your personal use. This figure is then divided by the number of days in the FBT year. The 'capital cost' refers to the total cost of the lease, including any additional benefits.
The 'statutory fractions' are as follows:
Distance Travelled |
FBT Liability |
Statutory Fraction |
Less than 15,000 km |
20% |
0.20 |
15,001 - 25,000 km |
20% |
0.20 |
25,001 - 40,000 km |
17% |
0.17 |
More than 40,000 |
13% |
0.13 |
Example
Dave has a Novated Lease with a capital cost of $30,000. He has travelled 23,000km during the FBT year. His car has been available for private use for 365 days. The Taxable Value of Dave's Car is calculated as (30,000 x 0.2 x 365) / 365 = $6000.00
This Taxable Value can be offset using the 'Employee Contribution Method' (ECM). An Employee Contribution is an amount towards your lease payment that has already been taxed, a 'post tax' amount. Under the Australian Tax Office's rules, every dollar made as a post tax contribution; reduces the Taxable Value by the same amount. Most employers will offer the Employee Contribution Method as the standard payment model.
The amount of FBT you are required to pay is included in the information shown in your online instant quote.
This figure can also be explained to you by speaking to one of our Novated Lease Consultants. Please contact easifleet if you have any concerns or questions about FBT payments.