PJT Accountants

Car Fringe Benefits Records

3 October 07 Australia Tax Office Some employers are using inaccurate methods in dealing with the fringe benefits tax (FBT) obligations resulting from providing car benefits to their employees, the Tax Office has warned.

Claiming FBT isn't always straightforward, so detailed information is provided on the Tax Office's dedicated web page for employers www.ato.gov.au/employers

Three of the areas that employers are getting wrong are:

  • logbooks do not provide enough information about the car's use;
  • where a car is garaged at an employee's residence and the employer is claiming substantial business use for the car using the operating cost method, but there is no record in the logbooks of business travel being made; and
  • employee contributions are incorrectly treated for income tax and GST purposes.

An employer using the operating-cost method to calculate the taxable value of a car fringe benefit needs to include the following details for each business journey:

  • the date on which the journey began and ended;
  • the odometer readings at the start and end of each journey; and
  • the kilometres travelled and the purpose of the journey.

Entries made under the category of ‘purpose of the journey' must be in English and detailed enough to show why a journey was for business – simply describing a journey as ‘business' or ‘miscellaneous business' is not enough.

Car users should also be aware of FBT obligations that may arise under the ‘home garaging rule'. In particular, a car garaged at an employee's home is, in most instances, considered to be available for private use.

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