Fringe Benefit Tax on motor vehicle

Fringe benefit tax (FBT) is a tax on benefits that employees receive and enjoy as a result of their employment. It is generally between employer and employee. A self-employed sole trader is not part of this scheme. FBT replaces the PAYE tax that would be deducted from the employee if the employee was given the money to purchase the benefit as part of salary or wages instead of the actual benefit.

The purpose of this tax is to encourage employers to pay remuneration in cash rather than a payment in other kinds. FBT helps to widen the tax base, supply more revenue, and improve equity and resource allocation.

There are two ways to calculate FBT for motor vehicle: Quarterly basis or Annual basis.
The FBT value for each quarter is 5% of the owner’s GST inclusive cost price of the vehicle. If FBT is paid on an annual basis, the value of the benefit is 20% of the owner’s GST inclusive cost price. If you need help to calculate FBT, please contact us or seek professional advice.

Disclaimer: The following answer necessarily sets out general principles only. The facts of particular cases always need to be considered carefully, and it may be necessary to obtain advice from a tax expert.

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