You may not be an accountant, but you need to know about Fringe Benefits Tax (aka FBT) and how it applies to a novated lease.
FBT applies to many non-cash benefits an employee gets from their employer, such as entertainment, living-away-from-home expenses, and the private use of a company- owned car.
The Australian Tax Office says that “a benefit” arises when a work vehicle is used for private travel by an employee.
You’ll be using your novated lease vehicle for private trips (because that’s what we do with cars) so you’ll be getting “a benefit” which will attract FBT.
If you start talking about FBT everyone’s either an expert, or an ostrich with their head in the sand. That’s because the calculation sounds complicated and varies depending on the type of organisation you work in.
Though the formula has changed in recent years to make it easier. It’s now a flat rate. Not like the old days when you needed to drive thousands of kilometres every year just to pay less FBT.
For the detailed orientated people you can get the what, why and how from the ATO website.
