2024 FBT Motor Vehicle - Fact Sheet

Motor Vehicle Odometer Reading

For all Motor Vehicles used in your Business, it is imperative that you keep a note of the odometer reading of each vehicle as at 31 March 2024. You may like to make a note in your diary to ensure this occurs, or organise an email to be sent to staff.

Motor Vehicle Logbooks

It is a requirement that Motor Vehicle Logbooks are completed every five years or when there is a significant change (greater than 10%) in the actual business usage of the Motor Vehicle. That is, a Logbook may be kept for year one and is therefore applicable for the following four years as well, at which time you require a new Logbook.

Usually, if there is a significant change in the business use percentage of the Motor Vehicle that is more than 10%, then you are required to maintain a new Logbook as well. We would recommend you consider updating logbook if you believe your business use may have changed.

If this is not attended to, then you will not be entitled to rely upon the Logbook Method and as a result, you may have to pay Fringe Benefits Tax as if the Motor Vehicle is privately used 100% of the time.

This means for the 2024 Fringe Benefits Tax year, the logbook you are relying upon must have been completed in the period since 1 April 2018.

Please note that the ATO targets the deductibility of Motor Vehicle Expenses when undertaking Audits. The two major issues are:

• Has a Logbook been kept?
• Has it been kept in the proper manner to comply with the Tax Act?

If you intend to calculate the private use component of your Motor Vehicles using a Logbook, then you will need to provide us with a copy of the Logbook so we can check it complies.

If you are unable to provide us with the Logbook, then we will have to use the statutory method in determining the private use amount. This may result in a higher private use calculation with a higher tax liability.

Statutory Formula Method - For cars provided after 10 May 2011

The statutory formula was phased into a flat rate of 20% during 2011 and is no longer dependent on the number of kilometres a vehicle travels. Where a car is garaged at home and has not been used for private purposes due to COVID, the ATO requires you to make an election to use the operating method in writing before 31 March 2024 to remove the FBT liability on the vehicle. Records of the odometer showing the lack of use will need to be kept.

Exempt Vehicles

The ATO introduced a further compliance requirement for exemption to fringe benefits tax. The exemption will only apply if the private use of the exempt vehicle is less than 1,000 kilometres for the entire year (excluding direct home to work travel). Also, no single, return journey for a private purpose can exceed 200 kilometres.

FBT Exemption for Zero or Low Emission Vehicles

A new exemption applies for electric vehicles. The following conditions must all be met:

• The car is a zero or low emissions vehicle. This means a battery electric vehicle, hydrogen fuel cell electric vehicle, or a plug-in hybrid electric vehicle.

Plug-in hybrid electric vehicles will not be eligible after 1 April 2025, unless the vehicle was exempt before 1 April 2025, and there is an existing commitment to continue providing the vehicle after 1 April 2025. Optional extensions are not considered existing commitments.

The exemption only applies to vehicles that are “cars” for FBT purposes, i.e., designed to carry a load of less than one tonne and less than 9 passengers. Other types of electric vehicles, such as electric motorcycles and scooters, will not qualify for the exemption.

• The first time the car is both held and used is on or after 1 July 2022. The car can be held prior to 1 July 2022; however, its first use must be after that date. “Held” means owned, leased, or otherwise made available by another entity.
• The car is used by a current employee or their associates (including family members).
• No amount of luxury car tax was payable on the supply or importation of the car. This means that the value of the car at the first retail sale must be below the luxury car tax threshold for fuel efficient vehicles ($89,332 in 2023–24).

The FBT exemption will extend to the associated car expenses for that vehicle, e.g., registration, insurance, repairs or maintenance, and fuel costs. Fuel costs include the cost of electricity to charge the vehicle. There is discussion of providing a reliable methodology to calculate these costs but in the interim check your owner’s manual to see if your manufacturer provides power usage data. Alternatively, keeping records showing the increase in quarterly bills against similar costs in prior years can support a claim.

Note that a home charging station is not a car expense associated with providing a car fringe benefit for electric cars and may attract FBT as a property or expense payment fringe benefit.

Exempt electric cars: reportable fringe benefits

The taxable value of the benefit must still be calculated to ensure the Reportable Fringe Benefit (RFBA) is included on the employee’s payment summary or Single Touch Payroll finalisation – where the amount is over $2,000.

The taxable value may still be lower using the logbook method, although the statutory method detailed above may be less onerous to keep.

Exempt electric cars: further considerations

• Hybrid vehicles that are not plug-in hybrid electric vehicles are not covered by the exemption.
• Registration and state and territory road user charges are considered car expenses and are also exempt.
• While this technically applies to second-hand vehicles, the requirement to prove it was unused prior to your purchase and that the initial sale price didn’t attract luxury car tax rests on the taxpayer and we expect this to hinder most claims.
• The impact of various state-based rebate programs on leases.
• The Plug-in Hybrid Electric Vehicle exemption needs to be accessed prior to 1 April 2025 to be exempt past this date.