Fringe Benefit Tax Calculator For Novated Leasing

In the past, the FBT was based on the vehicle’s value and the number of km driven per year. Today, it is based on 20% of the drive-away price minus government on-road costs. In this case, a $20,000 car would attract an FBT of $3,600. How does the FBT calculator work? Let’s look at each method. It’s important to note that some types of vehicles are not eligible for the FBT.

Employee contributions method

If you are using an Employee Contribution Method to novate your car lease, you will need to know the exact fringe benefit rate for the novated lease to avoid overpaying the tax. Regardless of the number of kilometres you travel, you will still need to know the fringe benefit rate. You can calculate the fringe benefit rate by dividing the number of fringe benefits by the annual wage of your employees. Then, multiply this figure by 100. It is important to remember that these figures are pre-tax, which means you can pay the tax with before-tax money, saving you even more.

Statutory method

In the case of a leased car, the statutory method of calculating fringe benefit tax applies. This method is based on the cost of the car and the number of days it is used privately. The FBT on a car is calculated using a fixed rate of 20% of the taxable value, based on the car’s base price, less any registration and stamp duty. Moreover, the taxable value is reduced by the number of days used privately. Learn more about VehicleSolutions novated lease FBT calculator.

Suppose the car is used exclusively for business purposes. In that case, the employee must track the percentage of personal use and reduce the total operating costs—the lower the percentage of private use, the lower the taxable value. Because personal novated leasing is most common for personal use, the statutory method is more accurate. Therefore, the FBT is deducted from the car’s cost if the vehicle is used mainly for private purposes.

Operating cost method

A novated lease car is a type of fringe benefit that gives rise to an FBT liability for the employer. Typically, the car’s cost base is the cost of the car. It is then multiplied by an FBT rate to determine the tax-deductible amount. The Statutory Formula and the Operating Cost method are used to calculate the Taxable Value. The Cost Base Value is the car’s purchase price, including GST, registration, and compulsory third-party insurance.

A salary package often involves wrapping a car into an employee’s salary. In such a situation, the employer agrees to deduct repayments from the employee’s pre-tax salary. This arrangement can reduce the employee’s taxable income, as the amount is reduced by salary sacrifice. Further, the repayment terms of a novated lease depend on the employee’s earnings and the amount of salary sacrificed. Learn more about VehicleSolutions novated lease FBT calculator.

Group-term life insurance coverage

A Fringe Benefits Tax calculator for novating leasing helps determine your tax responsibilities for leasing vehicles. The calculator is designed to calculate the FUTA tax on the cost of social security, Medicare, and other taxes that you and your employees pay. This tax is calculated on a gross-up basis and is rounded up to account for additional taxes. The resulting amount is then subject to the Fringe Benefits Tax of 47 per cent.

Fringe Benefit Tax is tax generated when an employer provides a non-cash benefit to its employees. It is a measure to counter past inadequacies in income tax law. The proposed exemption would apply to electric vehicles that cost less than $77,000. These tax savings may vary depending on their circumstances and the method used to calculate them. The proposed exemption would also apply to company cars and private purchases, but the employee benefit would be less.