Late last year saw the Australian Tax Office (ATO) develop a safe harbour for car fringe benefits.
A safe harbour is a guideline that allows Australian businesses to make use of an efficient way to calculate tax where certain conditions are met.
After collaborating with other industry representatives, the ATO developed a particular safe harbour that simplifies the approach for working out the business use percentage of car fringe benefits for fleets of 20 cars or more.
The new approach reduces the record keeping burden for businesses and allows them to use an ‘average business use percentage’ when using the operating cost method.
Businesses can access the safe harbour and use this new simplified approach if they have:
- a fleet of 20 or more ‘tool of trade’ cars, which are not part of salary packaging arrangements and cost less than the luxury car tax limit in the year acquired
- a mandatory logbook policy and hold valid logbooks for at least 75 per cent of the cars in the logbook year
Businesses can use the logbooks to calculate the fleet’s average business use percentage to all tool of trade cars held in the fleet in the logbook year and can use that percentage for the following four years.
For help with fringe benefits tax please call our tax accountants on (02) 4926 2300