Statutory formula reforms for car fringe benefits
11 May 2011
Over the next four years, the existing statutory fractions ranging from 7% to 26% applied when working out the taxable value of a car fringe benefit using the “statutory formula” method will be phased out and replaced by a flat rate of 20%.
Under the “statutory formula” method, the taxable value of a car fringe benefit depends on the relevant statutory fraction applied to the cost of the car. Currently, this statutory fraction decreases as the distance travelled by the vehicle increases. The new flat rate of 20% will apply regardless of the distance travelled during the year, removing the incentive for people to drive more than necessary to access higher tax concessions.
The 20% flat rate will only apply to new vehicle contracts entered into after 7:30 pm (AEST) on 10 May 2011, and will be phased in over four years as shown in the table below.
Statutory rate (multiplied by the cost of the car to determine a person’s car fringe benefit) applied to new contracts entered into after 7:30pm (AEST) on 10 May 2011
Distance travelled 10 May 2011 1 April 2012 April 2013 1 April 2014
0 – 15,000 km 0.20 0.20 0.20 0.20
15,000 – 25,000 km 0.20 0.20 0.20 0.20
25,000 – 40,000 km 0.14 0.17 0.20 0.20
More than 40,000 km 0.10 0.13 0.17 0.20