Member Q&A – When can you apply the 1/3rd FBT base value reduction?


In getting ready for the 2021/22 FBT year we are just wanting to clarify our understanding around when is it possible to apply the 1/3rd base value reduction for cars on which we calculate FBT using the statutory method?

If we commenced to hold the car for the purposes of providing fringe benefits  in the FBT year ending 31 March 2016 can we apply the 1/3rd base reduction in 2021/22FBT year?


Under the statutory method it is possible to reduce the ‘base value’ of a car by 1/3rd where the commencement of the FBT year (in this case 1 April 2021) is later than the fourth anniversary of the earliest holding time.

As the car was held by 31st March 2016, 1 April 2021 is later than the fourth anniversary of the earliest holding time which would be any day before 1 April 2016 (the FBT years 2016/17, 2017/18, 2018/19, 2019/20 would not satisfy the 4 year test though).

On this basis, the base value may be reduced by 1/3rd in the 2021/22 FBT year.

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