As the end of the Fringe Benefits Tax year draws near, 31 March, there are a few things you need to know if you use a motor vehicle in your business.
Hey you! The one with the car!
As the end of the Fringe Benefits Tax year draws near, 31 March, there are a few things you need to know if you use a motor vehicle in your business.
Just so everyone is included, there are a few goodies for those of us who work for someone else too.
For the TL:DR, skip to the end. If you are a tax nerd like me, read on.
If you run your own business out of a company, trust, partnership
As most of you will know, private use of a car that is owned or operated by your business brings into play some rules around Fringe Benefits Tax (FBT).
For the purposes of FBT, cars are defined as:
- 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 designed to carry less than one tonne
- All other passenger-carrying vehicles designed to carry fewer than nine occupants
Without boring you with the details, there are two methods available for us to calculate the FBT on any private use, these are:
- Statutory formula method
- Operating cost method
Since we get to choose which method results in the least tax each year, Illumin8 will generally get information so we can work out both methods, and then choose the one that costs you the least.
To do that, we need for each car owned by the business:
- The odometer at 31 March each year
- An ATO compliant logbook completed once every 5 years
If you are really excited about how you can make a compliant deduction for your car in your business, feel free to reach out to our awesome accounting team for a chat.
Logbook
There are heaps of options for completing your very own logbook. To save you figuring it out for yourself, here are 3 options we recommend for getting it done:
- Rock up to your local officeworks/post office, pickup a paper logbook, and whack it on your dash. For 12 weeks, record every trip you take in the car, then post that sucker to 81 Watt Rd Mornington, and we will take it from there.
- For the sole traders out there, grab the ATO app and use its logbook function to record your trips. Once your 12 weeks are up, use the export function to email the info to admin@illumin8.com.au.
- Purchase a GOFAR device and subscription, plug the GOFAR into your cars diagnostic port, grab the app, and let the GOFAR do the hardwork for you. At the end of the 12 weeks, use the export function to email the info to admin@illumin8.com.au.
If in doubt, check out the ATO help page for the requirements you need to meet, and as long as whatever you are doing meets that, you are good to go.
If you work for someone or run your own business as a sole trader...
Fortunately for everyone else, we don’t have to worry about FBT (yay). But this also means a different set of rules. Fortunately, Mick has done the legwork for me here and written an entire blog on the topic which you can check out here.
The long and the short of it is, there is no distinction between whether your car is a utility (van, ute etc.) or a hatchback like under the FBT rules above. This means that to make a car deduction, you will need to follow the below.
TL:DR
If you run your own business out of a company, trust, partnership, we need for each of your cars in the business:
- Rego number
- The odometer reading on 31st of March 2023 (Photos or it didn’t happen)
- An ATO compliant logbook completed as soon as possible (if you have completed one in the last 4 years and sent it to Illumin8, you can skip this)
If you are an employee or operate as a sole trader, we need the following for each car you would like to claim a deduction for (once the financial year has finished):
- Rego number
- Either of:
- An ATO compliant logbook completed by 30 June 2023 (if you have completed one in the last 4 years and sent it to llumin8, you can skip this), and records of all your car expenses for the 2023 financial year (excluding fuel)
- An estimate of the total kilometres travelled for work/business for the entire financial year. Use this method option if you travel less than 5,000 km’s for work per year
If we do not receive the above, you may be severely limited in what we can claim for your car for the 2023 financial year. To make sure we get it, please send an email to admin@illumin8.com.au with the subject line Odometer Reading with the above.
If you have any questions about any of the above, give us a call on 03 9787 6872, or shoot through an email to admin@illumin8.com.au.
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