Example 4
Anglesey Wools Ltd leases a motor vehicle on 1 April 2006 with a cost price of $47,000 for a period of three years. The vehicle is available for use at all times and FBT is calculated on a quarterly basis. Below is the calculation using the cost price and the tax book value option for three years.
| Year | Cost price $ | Value of benefit $ | Taxable value x 4 periods $ | Tax book value$ | Value of benefit $ | Taxable value x 4 periods $ |
|---|---|---|---|---|---|---|
| 1 |
47,000
|
2,350
|
9,400
|
47,000
|
4,230
|
16,920
|
| 2 |
47,000
|
2,350
|
9,400
|
30,080
|
2,707
|
10,828
|
| 3 |
47,000
|
2,350
|
9,400
|
19,251
|
1,732
|
6,928
|
| Total payable |
28,200
|
34,676
|
||||
Tax book value has been calculated using 36% diminishing value depreciation rate.
At the end of the 3-year lease, Anglesey Wools Ltd returned the leased vehicle. It was then leased to an unassociated party; at that time the market value was $18,000. As the previous lessee and the new lessee are not associated parties, the new lessee can either choose the market price of $18,000 as the cost price, or apply the tax value option based on the value provided by the lessor.
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