3.9.3.32 Employer Provided Benefits - Cars

Summary

This topic contains information on the assessment of employer provided cars as income for the CSHC income test. It covers the following matters:

• a definition of a car benefit and exemptions,
• determining the relevant age of a car,
• determining the engine capacity and months of use, and
• determining the assessable income of a car benefit.

Definition of a car benefit & exemptions

A person receives a car benefit if they are provided with OR have made available to them a car for their private use and:

• the provider of the car is the person's employer or an associate of the person's employer, OR
• the car is provided under an arrangement between the car provider and the person's employer or an associate of the person's employer.

A car benefit is EXEMPT if it is not classified under SSAct section 1157C OR if the vehicle is a taxi, panel van or utility truck, or any other road vehicle designed to carry less than one tonne (other than a vehicle designed for the principal purpose of carrying passengers) and:

• the only private use of the vehicle is for work related travel and other minor, infrequent and irregular private use, OR
• the vehicle is unregistered.

Definition of a car benefit & exemptions

A person receives a car benefit if:

• they are provided with OR have made available to them a car for their private use, and
• the provider of the car is the person's employer or an associate of the person's employer, OR
• the car is provided under an arrangement between the car provider and the person's employer or an associate of the person's employer.

A car benefit is EXEMPT if:

• it is not classified under SSAct section 1157C, OR
• if the vehicle is a taxi, panel van or utility truck, or any other road vehicle designed to carry less than one tonne (other than a vehicle designed for the principal purpose of carrying passengers), and
• the only private use of the vehicle is for work related travel and other minor, infrequent and irregular private use, OR
• the vehicle is unregistered.

Act reference: SSAct section 1157C Car benefits

Determining the relevant age of a car

The relevant age of a car is determined by subtracting the car's year of manufacture from the calendar year in which the reference tax year began.

For the purposes of the CSHC, the reference tax year is usually the tax year immediately before the current tax year.

Example: If a person claims the CSHC in 2007 their reference tax year is 2005-06 if they made their claim prior to 30 June 2007. If their car was manufactured in 2000, the relevant age of the car is 5 years (2005 less 2000 equals 5). If the person claimed the CSHC from 1 July 2007 their reference tax year will be 2006-07 and the relevant age of the car is 6 years (2006 less 2000 equals 6).

When reassessments for the CSHC use an estimate of current year income, the rules will give a different outcome. As an estimate is based on the current year's income, the current year becomes the reference tax year.

Example: If an estimate of a person's 2007 income is used the relevant age of the car is 7 years (2007 less 2000 equals 7).

Determining engine capacity & months of use

For assessment purposes, cars are grouped in to 3 categories, based on the following engine capacities:

• up to 1600cc,
• 1601 to 2850cc, and
• over 2850cc.

Determining the assessable income of a car benefit

The assessable income of a car benefit is determined by:

• its age,
• the engine capacity of the car, and
• the number of complete months in the appropriate tax year that a person had or will have the car benefit.

If a person is a member of a couple (1.1.M.120), and both partners receive a car benefit in the appropriate tax year for the same car, each partner (1.1.P.70) is deemed to receive half the value of the car benefit.

SSAct section 1157L(2) contains a table listing car benefit values. The table shows the income per month for cars, according to their age, under each of these engine capacities.

Act reference: SSAct section 1157L(2) Method of valuing car fringe benefits

Policy reference: SS Guide 1.1.R.105 Reference tax year (CSHC)

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Last reviewed: 11 August 2011