Should you buy inside or outside the business? Compare the tax outcomes and make the right call.
Enter the motorbike cost and expected running expenses.
How will the motorbike be used and how is your business set up?
Used to estimate the personal tax deduction if the motorbike is purchased outside the business.
Fringe Benefits Tax is a tax paid by employers on certain non-cash benefits provided to employees (or their associates). If a business owns a motorbike and an employee uses it for private purposes, FBT may apply to the private-use portion.
Unlike cars, motorbikes are not classified as "cars" under the FBT Assessment Act 1986. This means the statutory formula and operating cost methods that apply to cars do not apply to motorbikes.
Instead, motorbikes are treated as residual fringe benefits. The taxable value is simply the private-use portion of the total cost to the employer (depreciation + running costs).
If the employee could have claimed a deduction for the expense had they paid for it themselves, the taxable value of the benefit is reduced accordingly. In practice, this means only the private-use portion attracts FBT.
If the motorbike is used 100% for business, no FBT arises at all.
The FBT Assessment Act defines a "car" as a vehicle designed to carry fewer than 9 passengers and less than 1 tonne. Motorbikes don't meet this definition, so they fall outside the car FBT rules entirely.
| Cars | Motorbikes | |
|---|---|---|
| FBT classification | Car fringe benefit | Residual fringe benefit |
| Statutory formula method | ✓ Available | ✗ Not available |
| Operating cost method | ✓ Available | ✗ Not available |
| Taxable value basis | Statutory % of cost or operating cost | Private-use % of cost to employer |
| Logbook required? | For operating cost method | Recommended to support business % |
| Car limit applies? | ✓ Yes ($68,108 for 2023-24) | ✗ No |
This difference often makes motorbikes more tax-effective than cars when business use is high, because the taxable value is directly tied to actual private use rather than a statutory formula.
Purchasing the motorbike through the business saves you $1,200 per year compared to buying personally.
The break-even point is around 55% business use — above this, purchasing inside the business saves you $X per year.
Every situation is different. Let's work out the best structure for your specific circumstances.
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