If your business provides a vehicle to an employee (including yourself as a director or shareholder), Fringe Benefits Tax (FBT) can apply — and the method you use to calculate FBT can make a big difference to your tax bill.
One of the most common ways to reduce your FBT liability is by keeping a valid logbook. But what happens if you don’t have one?
Here’s what you need to know.
The Two FBT Valuation Methods
The ATO allows two methods for valuing car fringe benefits:
- Statutory Formula Method
- Operating Cost Method (requires a logbook)
Statutory Formula Method (Default Without a Logbook)
If you don’t have a valid logbook, you must use the statutory formula method. This is a simplified method that calculates the taxable value based on a flat percentage of the car’s cost, regardless of actual business use.
The statutory rate is 20% of the car’s base value (usually purchase price incl. GST and on-roads).
The taxable value is reduced proportionally if the car was available for less than the full FBT year.
Business vs private use is not considered — even if the car is used mostly for work.
This can be costly for businesses whose vehicles are used mostly for business purposes, as you still get taxed as though 20% of the car’s value is a fringe benefit.
Operating Cost Method (Logbook Required)
This method allows you to calculate FBT based on the actual running costs of the vehicle and the private-use portion.
Requires a 12-week logbook and odometer readings.
You can claim a lower taxable value if business use is high.
Includes all operating costs: fuel, servicing, rego, insurance, depreciation, etc.
If your vehicle is mostly used for business, this method can significantly reduce your FBT — but only if you’ve got the logbook to back it up.
No Logbook = Higher FBT
Without a logbook:
You’re stuck with the statutory formula method.
You could be paying much more FBT than necessary, especially for business-heavy use.
You miss out on the chance to claim the lower private-use % through the operating cost method.
Our Tip: Keep a Logbook to Minimise FBT
A simple logbook can save your business thousands in unnecessary FBT. It’s valid for five years and only needs to be kept for 12 weeks — a small effort for a big potential saving.
If your business provides cars, it pays to get the FBT method right. Talk to the Advisory One team today — we can help you keep your FBT bill in check.
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