On 16 July the Federal Government announced a proposed change to FBT (fringe benefits tax) legislation. If passed by parliament, these changes will result in the removal of the statutory method of calculating a motor vehicle fringe benefit which effectively removes the current 20% rate for FBT calculations. The Opposition has indicated that they will not support this legislation in the event that they win the election.
Removal of the Statutory Method of calculating the taxable value of a Motor Vehicle Benefit will leave only the Operating Cost method available. Under this method you calculate the costs associated with operating the vehicle for the FBT year (1 April – 31 March) or part thereof. These costs are fuel, maintenance, insurance and registration as well as lease payments or depreciation and interest.
Once total costs have been calculated, the percentage of private use and business use of the car needs to be established. Until now the only method of doing so has been to keep a handwritten logbook for each vehicle in the fleet. This means that every trip made in at least a twelve week period in the first year of ownership must be recorded in a logbook. This percentage is applied to the cost of the car to establish the taxable value of the benefit. For instance, if the total operating cost was $8,000 with 40% private use, the taxable value would be $3,200.
Hanrick Curran proactively explores the market for ideas that can assist our clients run more efficient businesses and are pleased to confirm we are the first accounting firm in Australia to have formed a relationship with Navman Wireless, the global leader in GPS based fleet management solutions. Navman Wireless has developed a cost-effective solution to calculate the business-private use of a vehicle without having to keep a written logbook. This solution is the only electronic method which has been approved by the ATO through a Class Ruling CR 2013/66, which applies from 1 April 2013. Since forming this alliance we have developed an interface between the reports generated by Navman Wireless and our FBT software package to deliver accurate cost effective FBT returns for our business clients' vehicles.
For further information about tax implications on vehicle purchase decisions or the Navman Wireless business-private use module, please call your Hanrick Curran advisor on (07) 3218 3900.
This article was published in the Spring 2013 Horizon. For a pdf version of the newsletter please click here.