How+to+calculate+the+taxable+value+of+a+car+fringe+benefit

How to calculate the taxable value of a car fringe benefit

http://www.maus.com.au/about/aboutserver.asp?inA=1&hx=215,27,110&AID=527&PID=6 Operating Cost Method The formula to calculate the taxable value under the operating cost method is as follows: **(C x (100% - BP)) - R** where:

C is the operating costs of the car during the holding period BP is the business percentage as established under the log book rules R is the amount of any recipient's (employee's) contribution The operating cost method will typically be used for operational type vehicles with a high business use. As the taxable value is based on actual business use, a lower taxable value will be calculated using this method for high business use vehicles. **Example**

Assume a car owned by the employer is used privately throughout the FBT year: > > > > The taxable value of the car fringe benefit for the 2002/2003 FBT year would be:
 * operating costs (fuel, insurance, repairs, etc.) were $5,000
 * the depreciated value at 1 April 2002 was $20,000, so that depreciation at 22.5% to 31 March 2003 would be $4,500 (22.5% @ $20,000)
 * the statutory interest rate is 6.05% (for the year ended 31 March 2003), so that the interest component to 31 March 2003 is $1,210 (6.05% x $20,000)
 * the business percentage under the log book procedures is say, 75%
 * the employee spent $1,000 on fuel and has provided the required declaration to the employer.

<span style="font-family: Verdana,Arial,Helvetica,sans-serif; font-size: 10px;">(C x (100% - BP)) - R <span style="font-family: Verdana,Arial,Helvetica,sans-serif; font-size: 10px;">((5,000 + 4,500 + 1,510) x (100% - 75%)) - 1,000 = $1,677.50 <span style="font-family: Verdana,Arial,Helvetica,sans-serif; font-size: 10px;">In the following year, the depreciation and imputed interest is calculated on the written down value. In the example above, this is $15,500. The statutory interest rate will change from year to year. If the car is acquired or disposed during the year, the value is apportioned on a daily basis. How you can obtain these figures are explained as follows. <span style="color: #331068; font-family: Verdana,Arial,Helvetica,sans-serif; font-size: 12px;">Defining operating cost (C) <span style="font-family: Verdana,Arial,Helvetica,sans-serif; font-size: 10px;">The operating costs are defined as the following expenses: > <span style="font-family: Verdana,Arial,Helvetica,sans-serif; font-size: 10px;">Imputed interest is calculated at the relevant statutory interest rate for the FBT year (see the 'loan fringe benefit' section in the Other Fringe Benefits chapter). For example, for the year ended 31 March 2002, the imputed depreciation (22.5%) and interest (7.55%) totals 30.05% of the written down value of the car. <span style="font-family: Verdana,Arial,Helvetica,sans-serif; font-size: 10px;">The above expenses form part of the calculation of the taxable value, whether or not the expenditure is incurred by the employer or another person. That is, the total operating costs of the car are included, irrespective of who paid the expense.
 * <span style="font-family: Verdana,Arial,Helvetica,sans-serif; font-size: 10px;">car expenses, such as petrol and oil, registration, insurance, repairs and maintenance and car lease payments (if car leased). All costs including GST.
 * <span style="font-family: Verdana,Arial,Helvetica,sans-serif; font-size: 10px;">imputed interest and depreciation will also be included if the car is owned (not leased) by the employer. Depreciation is calculated at 22.5% of the written down value (depreciated value including GST) of the car each year. The rate is fixed. The income tax depreciation cost limit does not apply for FBT purposes.


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