FBT on work vehicles, explained

If a work car is available for an employee's private use, the employer generally owes fringe benefits tax on it. You can calculate the taxable value two ways, a flat formula based on the car's value or an actual-cost method based on a logbook, and you are allowed to pick whichever is lower. Both methods need clear data about days available, odometer readings and trip purposes.

When FBT applies

A car fringe benefit arises when a car your business owns or leases is available for an employee's private use. Available is the trap: a car garaged at or near an employee's home counts as available for private use even if it never left the driveway. Home-to-work travel is private use for most employees.

The FBT year runs 1 April to 31 March, and the tax rate is 47 percent of the grossed-up taxable value.

The two methods

The statutory formula method is the default. Taxable value is 20 percent of the car's base value, scaled by the share of the year it was available for private use, minus anything the employee contributed after tax. The base value drops by one third once the car has been held four full FBT years. No logbook needed, and the statutory formula glossary entry has the detail.

The operating cost method uses actual running costs, fuel, servicing, registration, insurance, plus deemed depreciation and interest for owned cars or lease charges for leased ones, multiplied by the private-use percentage from a valid logbook. High business use makes this method dramatically cheaper. The logbook must cover a continuous, representative 12 weeks, record each business trip with odometer readings and a specific purpose, and it then holds for five years. The word "business" alone is not an acceptable purpose. See the logbook method entry.

The electric car exemption

Eligible electric cars are fully exempt from FBT: battery or hydrogen fuel-cell cars first held and used on or after 1 July 2022, priced under the luxury car tax fuel-efficient threshold ($91,661 for 2026-27 purchases), and provided to an employee. Plug-in hybrids only qualify under transitional rules for arrangements in place before 1 April 2025.

Two catches. The benefit is still reportable: you still calculate a notional value and it can appear on the employee's income statement as a reportable fringe benefits amount. And a phased wind-back of the exemption is legislated to begin from 1 April 2027, so build the business case on current law with that date in view.

The data that decides everything

Your fleet platform can capture this information through normal bookings and trips, so it does not need to be rebuilt at year end. See how this works in practice: FBT on pool cars.

This guide is general information, not tax advice. Confirm your position with your accountant and the ATO pages below.

The FBT data checklist

If you can tick these, FBT time is arithmetic instead of archaeology.

• Every car's base value, purchase date and holding period are on record.
• Days available for private use are tracked, including home garaging.
• Cars on the operating cost method have a current, valid 12-week logbook.
• Every business trip includes start and end odometer readings and a specific purpose.
• Running costs are tracked per vehicle, not as one fleet bucket.
• Employee contributions are documented and matched to cars.
• Electric car exemption eligibility is checked against the threshold for the year each car was first held.
• Records are kept for five years.

Official sources

• ATO: Taxable value of a car fringe benefit
• ATO: FBT rates and thresholds
• ATO: Electric cars exemption
• ATO: Logbook method

Last updated 10 July 2026. General information, not tax or legal advice.