In the Federal Budget released Tuesday night, the Government has provided further details on the application of the single statutory rate for car fringe benefits provided to employees.
The new measures are more generous than previously anticipated to the extent that the flat rate only applies to new vehicle purchase and lease agreements entered from 10 May 2011 and a transitional period has been implemented for employers.
The 20% flat rate will now be phased in over 4 years as shown by the following table:
As a result of the new measures additional administrative burden will be placed on employers during the 2012 to 2014 FBT years, but the use of the statutory formula method will become simpler thereafter.
Employers will also need to ensure that any new novated leases entered should take into account the above changes to the statutory rate.
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