Taxable value, contribution and FBT
A higher after-tax contribution lowers the taxable value and the FBT payable.
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Australia Car FBT Calculator
Work out fringe benefits tax on a novated lease or employer-provided car using the ATO's statutory formula method, and see how much an after-tax contribution can save.
FBT payable
$9,777
Statutory formula amount—
Your contribution—
Taxable value—
Contribution to reduce FBT to $0—
How car FBT works under the statutory formula method
When an employer (or a novated lease) makes a car available for an employee's private use, the ATO treats that as a fringe benefit. The statutory formula method values it at a flat 20% of the car's base value each year, prorated for any days it wasn't available. FBT payable is then that taxable value, grossed up and taxed at the FBT rate.
Many novated lease arrangements use the employee contribution method (ECM): paying part of the running costs from your after-tax salary reduces the taxable value dollar for dollar, and a contribution equal to the full statutory amount reduces the FBT payable to zero.
The formula
statutory formula amount = base value × 20% × (days available ÷ 365)
taxable value = statutory formula amount − after-tax contributions (not below $0)
FBT payable = taxable value × 2.0802 (Type 1 gross-up) × 47% (FBT rate)
taxable value = statutory formula amount − after-tax contributions (not below $0)
FBT payable = taxable value × 2.0802 (Type 1 gross-up) × 47% (FBT rate)
Worked example
A $50,000 car available all year (365 days) with no employee contribution has a statutory formula amount of $50,000 × 20% = $10,000, which becomes the taxable value. FBT payable is 10,000 × 2.0802 × 47% = $9,777. Contribute the full $10,000 after tax instead, and the taxable value drops to $0, eliminating the FBT entirely, the strategy behind the employee contribution method.
Frequently asked questions
What is the statutory formula method?
A flat 20% of the car's base value, regardless of kilometres driven, prorated for availability.
How does a novated lease use FBT?
Your employer becomes liable for FBT on your private use; the ECM is often used to offset it.
What is the employee contribution method?
After-tax contributions reduce the taxable value dollar for dollar, potentially to zero.
Are EVs exempt?
Many eligible EVs under the luxury car threshold are FBT-exempt; most new PHEV arrangements from 1 April 2025 are not.
What rates are used?
The 47% FBT rate and 2.0802 Type 1 gross-up rate, standard for most vehicles.