FBT & Motor Vehicles – Fact Sheet
Motor Vehicle Speedometer Reading
For all Motor Vehicles used in your Business, it is imperative that you keep a note of the speedometer reading of each vehicle as at 31 March 2022. You may like to make a note in your diary to ensure this occurs.
Motor Vehicle Logbooks
It is a requirement that Motor Vehicle Logbooks are completed every five years or when there is a significant change (greater than 10%) in the actual business usage of the Motor Vehicle. That is, a Logbook may be kept for year one and is therefore applicable for the following four years as well, at which time you require a new Logbook.
Usually, if there is a significant change in the business use percentage of the Motor Vehicle that is more than 10%, then you are required to maintain a new Logbook as well. However, if the difference is due to the change of circumstances surrounding COVID, your previous logbook can be relied on regardless of the change in %. We would recommend you consider doing a voluntary logbook if you believe your business use will be significantly higher.
If this is not attended to, then you will not be entitled to rely upon the Logbook Method and as a result, you may have to pay Fringe Benefits Tax as if the Motor Vehicle is privately used 100% of the time.
This means for the 2022 Fringe Benefits Tax year, the logbook you are relying upon must have been completed in the period since 1 April 2017.
Please note that the ATO targets the deductibility of Motor Vehicle Expenses when undertaking Audits. The two major issues are:
- Has a Logbook been kept?
- Has it been kept in the proper manner to comply with the Tax Act?
If you intend to calculate the private use component of your Motor Vehicles using a Logbook, then you will need to provide us with a copy of the Logbook so we can check it complies.
If you are unable to provide us with the Logbook, then we will have to use the statutory method in determining the private use amount. This may result in a higher private use calculation with a higher tax liability.
Statutory Formula Method – For cars provided after 10 May 2011
The statutory formula was phased into a flat rate of 20% during 2011 and is now not dependent on the number of kilometres a vehicle travels. Where a car is garaged at home and has not been used for private purposes due to COVID, the ATO requires you to make an election to use the operating method in writing before 31 March 2022 to remove the FBT liability on the vehicle. Records of the odometer showing the lack of use will need to be kept.
Exempt Vehicles
The ATO introduced a further compliance requirement for exemption to fringe benefits tax. The exemption will only apply if the private use of the exempt vehicle is less than 1,000 kilometres for the entire year (excluding direct home to work travel). Also, no single, return journey for a private purpose can exceed 200 kilometres.
