The Government will make the tax system fairer by ensuring the fringe benefits tax
exemption for cars is targeted to actual business use rather than including personal use
This reform will remove the statutory formula method for both salary-sacrificed and employer-provided cars.
This ensures a more level playing field for all workers by removing a tax concession for the personal use of aÂ salary-sacrificed or employer provided car.
People who use their vehicle for work-related travel will still be able to use a log book to ensure their car fringeÂ benefit excludes any business use.Â Recent advances in technology, such as cheap and easy-to-use car log book â€˜appsâ€™, make this much easier todayÂ than when these rules were originally introduced in 1986.
Many of these apps will let the GPS on a smart phone do most of the work for you and let you send the resultsÂ directly to your employer or tax agent â€” no calculations required.
Most people claiming car expenses will be unaffected
This reform will not affect the more than 3.6 million workers â€“ including employees, the self-employed and sole
traders â€“ claiming deductions for work-related travel expenses when they use their own car for work reasons.
The changes do not affect the existing exempt car benefit concessions that apply to certain uses of taxis, panel
vans, utes and other non-car road vehicles.
Around two-thirds of employees that salary sacrifice a car earn over $100,000.
Less than one in 50 employees earning less than $100,000 are affected.
If an individual uses their vehicle for a significant amount of work-related travel, they will still be able to use the
operating cost method to ensure their car fringe benefit excludes any business use of the vehicle. Fringe benefits
tax will still only apply to the private portion of any benefit provided to an employee.
Employers who provide a work car to employees for occasional private use (for example, weekend travel) will
continue to be able to use the operating cost method.