how does fbt work on cars

Ah, the dreaded FBT—Fringe Benefits Tax. In Australia, this tax bites companies that provide employees with car perks. Essentially, if your employer lets you use a car for personal reasons, they must pay FBT on the 'taxable value' of that benefit. This value is usually calculated using either the statutory formula method (a flat rate based on kilometres travelled) or the operating cost method (actual expenses adjusted for business use).

Employers then report and pay this tax, which can significantly increase the cost of offering a company car. For employees, it means their boss might charge extra or reduce salary packaging options. If you want the nitty-gritty, ServiceCentral or the ATO website are your mates.