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Director company car - FBT and other issues

Discussion in 'Accounting, Tax & Legal' started by SH, 11th Jul, 2012.

  1. SH

    SH Member

    Joined:
    26th Oct, 2008
    Posts:
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    Location:
    Sydney, NSW
    Hi

    Just a few quick questions about FBT on company cars.

    1. Assume a person is a director of a company but is not an employee of the company, but the person drives the company's car. Everything in the ATO website keeps referring to an "employee" so, if a director is not an "employee", does that mean the FBT issues do not apply?

    2. If FBT issues DO apply, what is the simplest way to deal with the issue if a log book has been kept and the log book shows approx 90% business use (ie 10% private use) on less than 10,000 km per year. For example, can 10% of the car running costs not be claimed as a deduction (paid instead by the director personally) or is there still a need to register for FBT, record it and pay in the BAS statements etc? We'd like the easiest possible way to handle the issue properly.

    Many thanks
     
  2. Terryw

    Terryw Well-Known Member

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    9th Jun, 2006
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    Location:
    Sydney
    A director would be classed as an employee for FBT purposes.

    see s136
    FRINGE BENEFITS TAX ASSESSMENT ACT 1986

    "current employee" means a person who receives, or is entitled to receive, salary or wages.
     
  3. Terryw

    Terryw Well-Known Member

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  4. SH

    SH Member

    Joined:
    26th Oct, 2008
    Posts:
    10
    Location:
    Sydney, NSW
    Thanks Terry - much appreciated.

    Any idea re the second part of the question re reducing the admin re compliance? Is it possible to (legally, of course) avoid registering, reporting etc re FBT by not claiming that % of costs that is private?

    Ie: assuming the log books shows 10% private use: if 10% of car's costs are not claimed as expenses by the company, is that the easiest way to legally manage compliance re FBT?

    Is there an easier way?

    Thanks again