Fringe Benefit tax
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 |
26% |
0.26 |
15,000 – 24,999 km |
20% |
0.2 |
25,000 – 40,000 km |
11% |
0.11 |
More than 40,000 |
7% |
0.07 |
Example
Dave has a $30,000 car on a novated lease. He has travelled 23,000km during the FBT year. His car has been available for his private use for 365 days. Dave’s FBT is calculated as (30,000 x 0.2 x 365) / 365 = $6000.00
Fringe Benefit Tax can be offset using the ‘Employee Contribution Method’. This method means that a portion of your lease payment is made as a post−tax deduction. Under the Australian Tax Office’s rules, every dollar made as a post−tax deduction reduces your FBT liability 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.