FBT and cars - flat 20% valuation rate to apply
The Government announced that the current statutory formula 4 -percentage rate scale method for valuing car fringe benefits be replaced with a single statutory rate of 20%, regardless of the number of kilometres travelled.
The changes will apply to new vehicle contracts entered into after 7:30pm (AEST) on 10 May 2011, and will be phased in over 4 years
The flat 20% rate will particularly benefit those who drive less than 15,000 kilometres, resulting in an FBT saving. For those who drive between 15,000 and 25,000kms pa, there will be no change - the rate stays at 20%. For those who drive between 25,000 and 40,000kms pa, the rate will rise from 11% to 20% over 3 years. For those who drive more than 40,000kms pa, the rate will rise from 7% to 20% over 4 years
People who use their vehicle for a significant amount of work-related travel will still be able to use the "operating cost" (or "log book") method to ensure their car fringe benefit excludes any business use of the vehicle.
Those driving more than 25,000 kilometres a year might find that using the alternative operating cost method will be more beneficial.