Fringe Benefits Tax Assessment Act 1986

PART III - FRINGE BENEFITS  

Division 2 - Car fringe benefits  

Subdivision B - Taxable value of car fringe benefits  

SECTION 10   TAXABLE VALUE OF CAR FRINGE BENEFITS - COST BASIS  

10(1)    
An employer may, in relation to a particular car, elect that this section apply in relation to all the car fringe benefits in relation to the employer in relation to a year of tax that relate to that car.

10(2)    

Subject to this Part, where an election is made under subsection (1) , the taxable value, or the aggregate of the taxable values, as the case requires, of the car fringe benefits in relation to the employer in relation to the year of tax that relate to the car while it was held by a particular person (in this section referred to as the provider ) during a particular period (in this section referred to as the holding period ) in the year of tax is the amount calculated in accordance with the formula:

(C × (100% − BP)) − R

where:

C is the operating cost of the car during the holding period;

BP is:

(a) if, under section 10A or 10B , the employer is not entitled to a reduction in the operating cost of the car on account of business journeys undertaken in the car during the holding period - nil; or

(b) (Omitted by No 145 of 1995)

(c) in any other case - the business use percentage applicable to the car for the holding period; and

R is the amount (if any) of the recipient ' s payment.

10(3)    
For the purposes of subsection (2) :

(a)    

the operating cost of the car during the holding period is the sum of:

(i) any car expenses (other than insured repair expenses or expenses in respect of registration and insurance) relating to the car incurred during the holding period (whether the expenses are incurred by the provider or by any other person), not including, in a case where the car is leased to the provider, any car expenses incurred by the lessor pursuant to the lease agreement; and

(ii) so much of any expense paid or payable in respect of the registration of, or insurance in respect of, the car as is attributable to the holding period (whether the expenses are incurred by the provider or by any other person), not including:

(A) in a case where the car is owned by the provider - any expense incurred before the provider became the owner of the car; or

(B) in a case where the car is leased to the provider - any expense incurred by the lessor pursuant to the lease agreement; and

(iii) in a case where the car is owned by the provider:

(A) the amount of depreciation that is deemed to have been incurred by the provider in respect of the car in respect of the holding period; and

(B) the amount of interest that is deemed to have been incurred by the provider in respect of the car in respect of the holding period; and

(iv) in a case where the car is owned by the provider and a non-business accessory was fitted to the car during the period when the car was owned by the provider and remained fitted to the car at a time during the holding period:

(A) the amount of depreciation that would be deemed to have been incurred by the provider in respect of the accessory in respect of the holding period if the accessory were a car; and

(B) the amount of interest that would be deemed to have been incurred by the provider in respect of the accessory in respect of the holding period if the accessory were a car; and

(v) in a case where the car is leased to the provider:

(A) where sub-subparagraph (B) does not apply - so much of the charges paid or payable under the lease agreement as are attributable to the holding period; or

(B) where the lessor was entitled to privileges or exemptions in relation to customs duty in respect of a transaction by which the lessor purchased the car - the amount that could reasonably be expected to have been applicable under sub-subparagraph (A) if the lessor had not been entitled to those privileges or exemptions; and

(vi) in a case where the car is neither owned by, nor leased to, the provider - the amount of depreciation and interest that would be deemed to have been incurred by the provider in respect of the car in respect of the holding period if the car had been purchased by the provider at the time when the provider commenced to hold the car for a consideration equal to the leased car value of the car at that time; and

(b) (Omitted by No 139 of 1987)

(c)    

the amount of the recipient ' s payment is the sum of:

(i) in a case where expenses were incurred to the provider or employer during the holding period by recipients of the car fringe benefits by way of consideration for the provision of the car fringe benefits - the amount of those expenses paid by the recipients less any amount paid or payable to the recipients by way of reimbursement of those expenses; and

(ia) in a case where car expenses in respect of fuel or oil for the car were incurred during the holding period by recipients of the car fringe benefits and:

(A) the persons incurring those expenses give to the employer, before the declaration date, declarations, in a form approved by the Commissioner, in respect of those expenses; or

(B) documentary evidence of those expenses is obtained by the persons incurring the expenses and given to the employer before the declaration date;

the amount of those expenses paid by the recipients less any amount paid or payable to the recipients by way of reimbursement of those expenses; and

(ii) in a case where:

(A) car expenses in respect of the car (other than car expenses in respect of fuel or oil for the car) were incurred during the holding period by recipients of the car fringe benefits; and

(B) documentary evidence of those expenses is obtained by the persons incurring the expenses and given to the employer before the declaration date;

the amount of those expenses paid by the recipients less any amount paid or payable to the recipients by way of reimbursement of those expenses.

10(3A)    

A reference in subparagraph (3)(a)(i) to an insured repair expense relating to a car is a reference to:

(a)    so much of an expense incurred in respect of repairs to the car as does not exceed an amount:

(i) received by way of insurance in respect of the repairs by the person incurring the expense;

(ii) paid by way of insurance in respect of the repairs in discharge of the obligation of the insured to pay the expense;

(iii) received by way of compensation in respect of the repairs by the person incurring the expense from the person legally responsible for the damage to the car; or

(iv) paid by way of compensation in respect of the repairs by the person legally responsible for the damage to the car in discharge of the obligation of the person incurring the expense to pay the expense; or

(b)    an expense incurred in respect of repairs to the car:

(i) by an insurer under a contract of insurance; or

(ii) by way of compensation by the person legally responsible for the damage to the car.

10(3B)    

Where, in accordance with subsection 162K(2) , the identity of a car changes one or more times during the period (in this subsection called the overall holding period ) that, apart from that subsection, would be the holding period, the operating cost of the car during each period (in this subsection called a statutory holding period ) that is a holding period in relation to the car when the car had a separate identity is so much of the amount that would have been the operating cost of the car during the overall holding period (assuming that the identity of the car had not changed during the overall holding period) as is attributable to the statutory holding period.

10(3C)    

Where, in accordance with subsection 162K(2) , the identity of a car changes one or more times during the period (in this subsection called the overall holding period ) that, apart from that subsection, would be the holding period, the recipient ' s payment in relation to each period (in this subsection called a statutory holding period ) that is a holding period in relation to the car when the car had a separate identity is so much of the amount that would have been the recipient ' s payment in relation to the overall holding period (assuming that the identity of the car had not changed during the overall holding period) as is attributable to the statutory holding period.

10(3D)    

In determining, for the purposes of this section, whether:

(a)    

an expense is paid or payable in respect of the registration of, or insurance in respect of, a car; or

(b)    a charge is paid or payable under a lease agreement in respect of a car; or

(c)    

a lessor of a car is entitled to privileges or exemptions in relation to customs duty in respect of a transaction by which the lessor purchased the car;

a change, in accordance with subsection 162K(2) , to the identity of the car shall be disregarded.

10(4)    
An election by an employer under subsection (1) in relation to a year of tax:

(a)    shall be made by notice in writing to the Commissioner; and

(b)    shall be lodged with the Commissioner on or before the declaration date.

10(5)    

Where:

(a)    an employer elects that this section apply in relation to all the car fringe benefits in relation to the employer in relation to a year of tax that relate to a particular car; and

(b)    the taxable value, or the aggregate of the taxable values, as the case requires, of the car fringe benefits that relate to the car ascertained under subsection (2) of this section exceeds the taxable value, or the aggregate of the taxable values, as the case requires, that would have been ascertained under section 9 if that election had not been made;

this Act (other than section 162G ) applies, and shall be deemed always to have applied, for the purposes of ascertaining that taxable value, or the aggregate of those taxable values, as the case requires, as if that election had not been made.

10(6)    

Nothing in section 74 prevents the amendment of an assessment for the purpose of giving effect to subsection (5) .