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.
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.
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 2021 (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 2021 (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 2021 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 2021 financial year. To make sure we get it, please send an email to firstname.lastname@example.org 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 email@example.com.