Step by step
The FBT year runs from 1 April 2026 to 31 March 2027. Most employers use the statutory formula, which ignores how many kilometres you drive.
- Base value: $45,000 (cost including GST, excluding rego and stamp duty)
- Taxable value: $45,000 × 20% × 365/365 days = $9,000
- Grossed up (Type 1, because the employer can claim GST credits): $9,000 × 2.0802 = $18,722
- FBT at 47%: $8,799
The employer pays this FBT. Many salary packaging and novated lease deals pass the cost on to you, so it is worth understanding.
Other car values
| Base value | Taxable value (20%) | Grossed-up value | FBT (47%) | After-tax contribution for $0 FBT |
|---|---|---|---|---|
| $30,000 | $6,000 | $12,481 | $5,866 | $6,000 |
| $40,000 | $8,000 | $16,642 | $7,822 | $8,000 |
| $45,000 | $9,000 | $18,722 | $8,799 | $9,000 |
| $50,000 | $10,000 | $20,802 | $9,777 | $10,000 |
| $60,000 | $12,000 | $24,962 | $11,732 | $12,000 |
| $75,000 | $15,000 | $31,203 | $14,665 | $15,000 |
How to reduce the FBT
- Employee contribution: if you pay $9,000 a year from your after-tax pay towards the car (for example by paying some running costs or through a novated lease “ECM”), the taxable value falls to $0. A $4,000 contribution cuts the FBT to $4,888.
- Days not available: the formula counts only days the car is available for private use. If it is available for 200 days, the taxable value is $4,932 and the FBT $4,822.
- Operating cost method: instead of the formula, the employer can use a logbook and tax only the private share of the actual running costs. This helps when business use is high.
- An eligible electric car is exempt entirely — see the EV guide linked below.
Utes and vans can be different
A ute or van designed to carry 1 tonne or more, or 9 or more passengers, is not a “car” for FBT. Its private use is exempt if it is limited to driving between home and work, and other minor, infrequent use. Twin-cab utes often carry less than 1 tonne, so check the payload before assuming the exemption.
Who pays, and what shows on my income statement?
FBT is the employer’s tax, but under a salary packaging or novated lease arrangement it is usually built into your package. The taxable value is also reported on your income statement as a reportable fringe benefit (grossed up by 1.8868), unless it is reduced to $0 by your contributions. That reportable amount is not taxed, but it is counted for things like the Medicare levy surcharge and HELP repayments.
FAQ
How much FBT is payable on a $45,000 car?
Under the statutory formula the taxable value is $9,000 (20%). Grossed up by 2.0802 and taxed at 47%, the FBT is about $8,799 for the 2026-27 FBT year.
How much do I need to contribute to reduce car FBT to zero?
An after-tax contribution equal to the taxable value: $9,000 a year for a $45,000 car available all year. A $4,000 contribution reduces the FBT to about $4,888.
Does the number of kilometres change FBT under the statutory formula?
No. Since 2014 the statutory formula uses a flat 20% of the base value regardless of kilometres. Only the days the car is available and employee contributions change the result.
Sources (checked 5 November 2026): Income Tax Assessment (Cents per Kilometre Deduction Rate for Car Expenses) Determination 2026, F2026L00785, registered 23 June 2026 (91c for 2026-27); ATO cents per kilometre method page; ATO Depreciating assets guide 2026 (car limit $69,674) and “Car thresholds from 1 July” (9 June 2026: car limit $69,883, LCT fuel-efficient $91,661); ATO Luxury car tax rate and thresholds; ATO FBT rates and thresholds (47%, gross-up 2.0802/1.8868, statutory 20%); Treasury joint media release “Fairer tax treatment to encourage affordable EVs” (5 May 2026) and ATO “Electric car discount” new-legislation page; Green Vehicle Guide (greenvehicleguide.gov.au); Australian Institute of Petroleum weekly prices (week ending 6 September 2026).