The Federal Government has legislated the changes to the statutory formula for calculating car fringe benefits. The below Frequently Asked Questions may assist you with your initial enquiries about the effects of this change.
Why has the statutory formula for calculating car fringe benefits changed?
On Tuesday, 10 May 2011, as part of the Federal Budget, the Treasurer announced changes to the calculation of fringe benefits tax ("FBT") for car fringe benefits. These changes have now been legislated and apply to new commitments entered into after 7.30pm (AEST) on 10 May 2011.
What are the new rates?
The Government has replaced the 'sliding scale' with a single flat rate of 20 per cent that applies regardless of the distance travelled. Transitional arrangements apply with the shift to a 20 per cent regime being phased in over 4 years in accordance with the following table:
| Distance travelled during the FBT year (1 April -- 31 March) | Statutory rate (multiplied by the cost of the car to determine a person's car fringe benefit) | ||||
| Existing contracts | New contracts entered into after 7:30pm (AEST) on 10 May 2011 | ||||
| From 10 May 2011 | From 1 April 2012 | From 1 April 2013 | From 1 April 2014 | ||
| Less than 15,000 km | 0.26 | 0.20 | 0.20 | 0.20 | 0.20 |
| 15,000 -- 24,999 km | 0.20 | 0.20 | 0.20 | 0.20 | 0.20 |
| 25,000 -- 40,000 km | 0.11 | 0.14 | 0.17 | 0.20 | 0.20 |
| More than 40,000 km | 0.07 | 0.10 | 0.13 | 0.17 | 0.20 |
Example: Transitional arrangements -- new commitment
James enters into a car novated lease arrangement starting on 1 July 2012. The lease on the car runs for two years. The total kilometres travelled during the relevant FBT years and applicable statutory rate for the car in each of the years is as follows:
| Period | Kilometres Travelled | Annualisation of kilometres | Statutory rate |
| 1 July 2012 to 31 March 2013 | 35,000 kms | 35,000 x 365/274 = 46,624 kms | 0.13 |
| 1 April 2013 to 31 March 2014 | 42,000 kms | not applicable | 0.17 |
| 1 April 2014 to 30 June 2014 (lease ends) | 10,500 kms | 10,500 x 365/91 = 42,115kms | 0.20 |
*Source ATO Fact Sheet for employers
When will the new statutory formula method apply to me?
The new rates apply to all contracts to provide car fringe benefits entered into after 7.30pm AEST on 10 May 2011, except where there is a 'pre-existing commitment' in place to provide a car.
All pre-existing commitments will remain under the old statutory rates unless there is a change that would amount to a 'new commitment'.
How do you define the contract date and time?
An unconditional contract is entered into when Custom Fleet places an order with the dealer for a motor vehicle in response to the lessee (customer) submitting a vehicle order for a lease (including a Novated Lease).
Example: Commitment entered into before 7.30pm AEST 10 May 2011 however delivery is delayed.
< Melanie Jamieson