The taxable value of a car fringe benefit can be determined in one of two ways by the statutory formula method or by the operating cost method (s9:10). An employer can choose either method each year for each car giving rise to a car fringe benefit. If an employer makes no express choice, then the statutory formula method automatically applies. If an employer elects to use the operating cost method for a particular car for any year, but the statutory formula would in fact result in a lower value for that year, then the lower statutory formula value applies for the year (s10(5)).

Statutory formula method

Advantage of using the statutory method

  • Concessional valuation rules assume that the business use percentage of a car increases as the number of kilometres it travels increase
  • Record keeping concessions apply under this method

Record keeping requirements

  • Employers are only required to produce evidence on the base value of a car and the opening and closing kilometres of the car for the FBT year. (eg 1 April 2007 - 31 March 2008).

FBT planning

  • An employer can reduce its FBT liability in relation to company car by garaging the company car at the employer's business premises while on Holiday or an extended business trip.

Logbook method- Operating cost method

Advantage of using the logbook method

  • The taxable value can be reduced by the businesses use percentage where a 12-week log book has been maintained. Therefore, the higher the business use of the car, the lower the taxable value for FBT purpose.

Record keeping requirements

  • The value of a car and the opening and closing kilometres of the car for the FBT year. (eg 1 April 2007 - 31 March 2008)
  • Logbook record- for a continuous 12 week period and be kept less than 5years
    • The date on which the journey began and ended
    • The odometer readings at the start and end of each journey
    • The kilometres travelled
    • The purpose of the journey

Operating cost summary

Description of operating cost Included Excluded
Registration a
Insurance a
CTP (Green Slip) a
Service & Repairs a
Petrol & Oil a
Lease payments (where car leased by employer) a
Car wash and detailing expenses a
Membership fees a
Tolls a
Car parking expenses a
Fines a

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Level 1, 12 Waters Road,
Neutral Bay NSW 2089,

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Fax: (02) 8969 8650

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