Novated Lease Fringe Benefits Tax (FBT)*

Fringe Benefits Tax (FBT) is tax paid on benefits provided to employees by employers or their associaties. FBT is seperate from income tax based on the taxable value of the benefit.

Essentially FBT applies to any benefit provided to an employee as a result of being an employee. Benefits can be provided directly from the employer, an associate of the employer or a third party who has an arrangement with the employer.

The term 'benefit' is used broadly but if a work car is provided for private use then it will generally be subject to FBT.

Who Pays FBT?

An employer pays FBT regardless if the type of business is a sole trader, partnership, trustee, corporation, unincorporated associations or government body or whether other taxes have been paid such as income tax

Car Fringe Benefit

A car is considered to be a fringe benefit when the car is owned or leased by an employer and provided for private use. If a car is garaged at or near the employees home it is considered to be available for private use, regardless of whether the employee has permission to use the car privately.

The definition of a car is:
  • a sedan, station wagon, panel van or utility (including four-wheel drive vehicles)
  • any other goods-carrying vehicle with a carrying capacity of less than one tonne, or
  • any other passenger-carrying vehicle designed to carry fewer than nine passengers.

Reporting FBT

From April 1 2007 the FBT threshold was increased from $1,000 to $2,000. An employer must record the grossed-up taxable value of the benefit on a payment summary for a financial year. This amount is known as the reportable fringe benefits amount.

While the reportable fringe benefit amount is included in a payment summary and appears on a tax return it is not included in total assessable income.

* Please Note: Information provided on this page has been attanied from the Australian Taxation office for general use. This information is not legal or financial advice and excludes all liability from any losses, damages, liabilities, claims and expenses (including but not limited to legal costs and defence or settlement costs) whatsoever arising from the use of this website.

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