What methods can you use to calculate car fringe benefits?
Emily Baldwin 
There are two calculation methods available to value a car fringe benefit – the Statutory Formula or the Operating Cost method. An employer can to choose which method determines the lowest taxable value. It can also alternate from FBT year to FBT year.
How does FBT work on cars?
The statutory FBT method is based on how much the vehicle costs rather than how much it is being used privately. It uses a flat rate of 20% of the car’s base value, taking into account the number of days per year the vehicle is available for private use.
What are common fringe benefits?
Common fringe benefits are basic items often included in hiring packages. These include health insurance, life insurance, tuition assistance, childcare reimbursement, cafeteria subsidies, below-market loans, employee discounts, employee stock options, and personal use of a company-owned vehicle.
How is FBT calculated?
To calculate an employee’s fringe benefit rate, add up the cost of an employee’s fringe benefits for the year (including payroll taxes paid) and divide it by the employee’s annual wages or salary. Then, multiply the total by 100 to get the fringe benefit rate percentage.
What is FBT car value?
A is the base value of the car. B is the applicable statutory percentage. C is the number of days in the FBT year when the car was used or available for private use of employees….Determining the statutory percentage.
| Total kilometres travelled during the year | Statutory percentage |
|---|---|
| More than 40,000 | 7% |
Is the use of a company car a fringe benefit?
The private use of a company car is a fringe benefit. If the spouse is not an employee or an officer of the company then the use of the car will be deemed to be a fringe benefit provided to the director. The same applies also where the car is not owned by that company but by its parent or another associated company.
How does the employer pay for fringe benefits?
Generally, fringe benefits tax (FBT) is paid by your employers for the benefits you, as an employee, receive in place of salary or wage. The employee doesn’t pay the tax directly, so to speak. Your employer takes the tax you owe from your wages through Pay As You Earn (PAYE).
How does Fringe Benefits Tax ( FBT ) work?
Generally, fringe benefits tax (FBT) is paid by your employers for the benefits you, as an employee, receive in place of salary or wage. The employee doesn’t pay the tax directly, so to speak. Your employer takes the tax you owe from your wages through Pay As You Earn ( PAYE ).
Can a self-employed person claim fringe benefits?
This guide refers to fringe benefits provided to employees and persons holding an office. Payments in kind for services rendered by a self-employed person are also taxable, but the manner in which they are to be valued and accounted for is not regulated by the Fringe Benefits Rules and they are outside the scope of this guide.
