In this article, we compare the FBT calculation methods in relation to company cars and car parking, including a worked example, and we highlight the common logbook and base value traps we see in practice.

We also include a dedicated section covering car parking benefits, including the 1km test, threshold indexation, and the small business exemption – areas that are consistently a source of frustration for clients, and which have attracted increased ATO scrutiny in recent years.

Car Benefit FBT Taxable Value Calculation Methods

Under the relevant legislation, the Fringe Benefits Tax Administration Act 1986 (“FBTAA”), employers can choose between two methods to calculate the taxable value of a car fringe benefit they provide: the statutory formula method OR the operating cost method.

The choice of method can significantly impact the FBT liability, and both have different and specific record-keeping requirements.

Statutory Formula Method:

• The default method.
  
• Formula:   (A × B × C ÷ D) − E

Where:

• A = Base value of the car.
  
• B = Statutory percentage (generally 20%).
  
• C = Number of days available for private use.
  
• D = Number of days in the FBT year.
  
• E = Any post-tax employee contributions.

Worked Example:

For the 2026 FBT year, the relevant details are as follows:

• The car’s cost price was $55,000, purchased in the 2024 FBT year.
  
• The car was available for private use all FBT year, except when at the repairers for 4 days following an accident.

FBT Taxable value = $55,000 × 0.2 x (361/365) = $10,879.45 (less any post tax employee contributions).

Base Value Traps:

• The base value is calculated as the cost price, including GST and any luxury car tax, but excluding registration and stamp duty costs. Ensure you check your workpapers against relevant supporting documents.
  
• The base value is set when the car is first held and does not reduce over time, even as the car ages. However, the legislation does allow for a 1/3 reduction in base value used to calculate FBT once held for 4 full years of FBT use. The reduced base value can then be uses for subsequent years

Operating Cost Method:

Formula:  Total operating expenses × % private use – any post tax employee contributions.

Requirements for Use:

• Employee must maintain a valid logbook for a continuous 12-week period, updated every five years or when pattern of usage changes.
  
• Keep odometer records at the start and end of each FBT year.
  
• Track all operating costs (fuel, maintenance, insurance, registration, depreciation, lease payments, etc.).

Worked Example:

For the 2026 FBT year, the relevant details are as follows:

• The car’s operating costs are $18,000 (including leasing payments, insurance, maintenance, fuel and rego).
  
• A valid logbook is maintained for the year, showing the following kilometres.
  
  • Personal kilometres – 8,000km.
    
  • Business kilometres – 17,000km.
    

• FBT Taxable value = $18,000 × (8,000/25,000) = $18,000 x 32% = $5,760 (less any post tax employee contributions).

Choosing a Method:

• You can select and change the method that results in the lowest FBT taxable value for each car, each year.
  
• It should be noted that for fleets of 20+ cars, a simplified record-keeping approach may be available (see ATO PCG 2016/10).

Logbook Requirements and Common Traps:

• Logbooks must be accurate, contemporaneous, and retained for five years.
  
• Accurate notation of each trip, the distance and its purpose is required.
  
• Electronic logbooks are becoming increasing sophisticated, accurate and user friendly, being adopted by many businesses.
  
• Failing to update logbooks after significant changes in usage is a common audit review point from the ATO.

Car Parking FBT in 2026

Following recent updates and clarifications to ATO guidance on this area, car parking benefits are a frequent focus of ATO enquiry and audit. Employers must ensure they undertake an annual assessment of the parking provided at all locations and whether the parking provided to its employees is subject to FBT.

1km Radius Test:

The baseline test is that FBT will apply to parking benefits provided to employees if there is a commercial parking station within 1km of the employer-provided parking that charges more than the ATO’s daily threshold ($11.03 for the year ended 31 March 2026. There are independent FBT car parking rate providers who can assist with assessment as well as obtaining the lowest rate where the parking provided is subject to FBT.

Daily Threshold Indexation:

The ATO sets the daily car parking threshold, indexed annually. For 2026, the rate after which FBT is triggered is $11.03.  it is worth noting this is not necessarily the amount on which FBT is payable, as an employer is able to then apply the lowest daily rate they can find within 1km of their parking as one of the valuation method options for car parking benefits. Formal market valuations are also an alternative option in some circumstances.

Small Business Exemption:

A business may be exempt from paying FBT on the car parking benefits it provides where all the following conditions are satisfied:

• The parking is not provided in a commercial car park.
  
• For the most recently completed income year before the start of the relevant FBT year, either the businesses:
  
  • Gross total income was less than $10 million.
    
  • Aggregated turnover was less than $50 million (how you calculate your aggregated turnover is the same as for the CGT small business entity eligibility).
    
• You are not a government body, a listed public company or a subsidiary of a listed public company.

A formal assessment of the application of the exemption should be documented.

ATO Audit Traps and Compliance Tips

• Base value errors: Not capturing the full GST inclusive base value, not updating FBT calculations for new vehicles or misclassifying added accessories.
  
• Logbook issues: Missing or outdated or incomplete logbook records.
  
• Parking threshold mistakes: Using the wrong daily rate or failing to correctly assess the 1km test.
  
• Small business exemption misapplication: Not correctly assessing all eligibility criteria.

What This Means for you as the FBT team

• Review your FBT calculations for all car benefits to asses the method used annually for each vehicle.
  
• Keep accurate and contemporaneous logbooks and odometer records up to date.
  
• Check the latest car parking threshold and exemption criteria.

Next Steps / Andersen Perspective

FBT on company cars and car parking is complex and a frequent area for enquiry in any ATO FBT compliance audit. Andersen can help you review your fleet, parking arrangements, to minimise risk. Contact us to discuss your circumstances or for tailored advice.

FBT 2026 Hub

Stay up to date with all of our FBT insights, guides and practical resources in our FBT 2026 hub:

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