What is FBT?
Fringe Benefits Tax (FBT) is applicable to all vehicles under a novated lease. There are two types of methods for calculating FBT on a motor vehicle, the statutory formula method and the operating cost method. The statutory method makes no distinction between private and business use. It is therefore the more appropriate method to use where a vehicle has high private use. The Operating Cost method may be suitable where a high business usage is involved. Under the Employee Contribution Method an employee makes a post tax contribution towards the running costs of the vehicle to eliminate or reduce the FBT payable (where employer policy allows).
FBT stands for Fringe Benefits Tax. If an employer provides you with any sort of remuneration or benefit other than cash salary, they may be providing you with a Fringe Benefit. As such, your employer may incur a Fringe Benefits Tax liability. In some cases (such as private vehicle usage) your employer may elect to charge this to your package as a cost of employment.
