Question 1

What is Fringe Benefits Tax (FBT)?

Accepted Answer

Fringe Benefits Tax is a tax paid by employers on certain benefits provided to employees or their associates in place of, or in addition to, salary. The most common fringe benefit is providing a vehicle for private use. The FBT year runs from 1 April to 31 March, and the current FBT rate is 47%.

Question 2

What is the difference between the statutory formula and operating cost method?

Accepted Answer

The statutory formula method uses a flat 20% of the vehicle base value as the taxable value, regardless of kilometres driven. It is the simpler method and does not require a logbook. The operating cost method calculates FBT based on the actual running costs of the vehicle multiplied by the personal-use percentage. It requires a valid 12-week logbook to substantiate business use and may result in lower FBT if business use is high.

Question 3

How does FBT apply to novated leases?

Accepted Answer

Under a novated lease, the employee leases a vehicle and the employer takes on the lease payments as part of the salary package. The employer is liable for FBT on the private-use component. Employee contributions (post-tax) can reduce the taxable value and therefore the FBT payable. The Employee Contribution Method (ECM) is commonly used with novated leases to minimise FBT.

Question 4

What is the current FBT rate and gross-up rate?

Accepted Answer

For the 2025-26 FBT year, the FBT rate is 47% (equal to the top marginal income tax rate including Medicare levy). The Type 1 gross-up rate (where the employer is entitled to a GST credit) is 2.0802. The Type 2 gross-up rate (no GST credit) is 1.8868. Most vehicle fringe benefits use the Type 1 rate.

FBT Calculator

Vehicle & FBT Details

FBT Results

Effective Cost

About the Statutory Formula Method

Frequently Asked Questions

Explore Related Calculators