Costing personal use of corporate aircraft
01/05/2007
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The most common method of costing personal use of corporate aircraft in Australia appears to cost the flight as 1st class travel, and adding the appropriate Fringe Benefits Tax (FBT).  This becomes problematic where the aircraft is used for destinations where there is no equivalent commercial comparison.

An alternative method that is becoming predominant in the US is to calculate the incremental cost. The incremental cost of personal use of corporate aircraft is calculated based on the variable operating cost, which includes the cost of fuel, aircraft maintenance, crew travel, on-board catering, landing fees, ramp fees and other smaller variable costs. Because corporate aircraft are used primarily for business travel, fixed costs that do not change based on usage, such as pilots’ salaries and purchase and lease costs, are excluded from the calculation of personal use benefit valuation.

Some US and Australian companies require reimbursement of incremental costs by the officer/s concerned.  This policy means that the aircraft is not considered a perquisite for disclosure of remuneration and, in Australia, attracts no FBT.

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