Tax

Luxury Car Tax
Fringe Benefits Tax
GST

Luxury Car Tax

The Victorian Government’s Motor Vehicle Leasing Facility does not allow funding of any vehicle which is subject to luxury car tax.

A 'luxury car' is a car with a GST inclusive value exceeding the luxury car tax threshold. The luxury car tax threshold is currently $57,123.

Luxury car tax legislation defines “car” to mean a “motor vehicle” (except a motor cycle or similar vehicle) designed to carry a load of less than two tonnes and fewer than nine passengers, or a limousine (regardless of the number of passengers it is designed to carry).

A car with a GST inclusive value above the luxury car tax threshold is subject to luxury car tax, except where:

• It is a prescribed emergency vehicle,
• It is not GST free and is specifically fitted out for transporting disabled people seated in wheelchairs. or
• It is a commercial vehicle that is not designed for the principal purpose of carrying passengers.

Fringe Benefits Tax

Fringe Benefits Tax presents complex issues for fleet managers across all industries including government.

The FBT year is the 12 months beginning 1 April and ending 31 March.

A car fringe benefit most commonly arises when a car held by an employer is made available for the private use of an employee. A car held by an employer is generally a car owned by, or leased to, the employer.

The following types of vehicles (including four wheel drive vehicles) are defined as cars for the purpose of FBT:

• Motor cars, station wagons, panel vans and utilities (excluding panel vans and utilities designed to carry a load of one tonne or more);
• all other goods-carrying vehicles with a designed carrying capacity of less than 1 tonne; and
• all other passenger-carrying vehicles with a designed carrying capacity of fewer than 9 occupants.

A car is taken to be made available for private use by an employee on any day when:

• It is actually used for private purposes by the employee or associate; or
• The car is not at the employer’s premises, and the employee is allowed to use it for private purposes.

In applying these rules, a car that is garaged at or near an employee’s home is treated as being available for the private use of the employee, regardless of whether or not the employee has permission to use it privately.

The taxable value of a car fringe benefit may be calculated by one of two methods:

The Statutory Formula Method
The taxable value of the car fringe benefit is a percentage of the car’s value. This percentage varies with the total distance travelled by the car during the FBT year (regardless of whether or not it is private travel). The greater the distance travelled, the lower the taxable value will be.

The Operating Cost Method
The taxable value of the car fringe benefit is a percentage of the total costs of operating the car during the FBT year. The percentage varies with the extent of actual private use. The lower the incidence of actual private use, the lower the taxable value will be.

Which method should be used?
The statutory formula method must be used unless the employer elects to use the operating cost method. The employer may choose the operating cost method for any or all of the employer’s cars.

VicFleet assists its clients by providing schedules of operating cost (where known) for the entire FBT year in April of each year. Departments are responsible for preparing their own FBT returns.

GST

For comprehensive information on the impact of GST on fleet management
please refer to the Australian Tax Office.