The Treasurer announced on 16 July 2013 that car fringe benefits tax was being changed to remove the statutory formula method for both salary-sacrificed and employer-provided cars (Fact Sheet).

Subject to the change being legislated it will apply from 16 July 2013 for new contracts entered into after announcement, with effect from 1 April 2014 and to existing contracts materially varied after 16 July 2013.

All car fringe benefits for new leases will be calculated using the operating cost method from 1 April 2014.

The operating cost method is based on the actual business use of the car as recorded in a log book. Tax is payable on the portion of operating costs attributable to private use.

The statutory formula method accepted personal use at 20 per cent, regardless of actual personal use of the car.