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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, your employer is potentially subject to a Fringe Benefits Tax. (FBT) It is usual, under a Novated Lease arrangement, for you to repay your employer this amount. The amount (if any) you are required to pay will depend on the total cost of the car ('The Capital Cost') and the number of kilometres you travel in any one FBT year (1st April to 31st March). The (FBT) Taxable Value 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 current statutory fractions are as follows:

Distance Travelled Statutory Fraction
Up to 15,000 km 20%
15,001 - 25,000 km 20%
25,001 - 40,000 km 20%
More than 40,000 20%

 

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 amounttowards 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 post tax contribution you are required to make is included in the information shown in your online instant quote. This figure can also be explained to you in more detail by speaking to one of our Novated Lease Consultants. Please contact australianfleet  if you have any concerns or questions about methods of reducing or eliminating FBT payments.