Question

Moving Fast Pty Ltd provided a car to one of his employees. The car was made available on the 1st of April 2019 for the employee’s private use. The employee has used the car for 200 days out of 365 days of the FBT year. The car traveled 30,000 kilometers and the base value of the car is $38,000. The employee did not make any contributions to this benefit.

Required:

Use the statutory method to calculate the car fringe benefits tax for Moving Fast Pty Ltd. Show the calculation step by step and explain it.

Answer 1

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

In the given case employee used the car for 200 days out of 365 is irrelevant as the car was available for sull 365 days.

The formula used for FBT calculations under Statutory Method is :

((A x B x C) / D)) - E

A - Base Value of the Car ( $38000 in given case)

B - Application Statutory percentage i.e 20%

C - Number of days in the FBT year when the car was available for employee use (365 in given case)

D - Number of days in the FBT year (365)

E - Employee Contribution (NIL in given case)

Interpreting above the FBT value stands as hereunder :

((38000 x 20% x 365)/365) - 0

= 7600