Executive Motor Vehicle Scheme

Victorian public service (VPS) executives can access a motor vehicle as part of their remuneration package under the Executive Motor Vehicle Scheme.

Executive Motor Vehicle Scheme

One of the beneﬁts available to executives is the ability to access a motor vehicle. An executive may access a vehicle under the Executive Vehicle Scheme and/or a novated leasing arrangement (see further detail on this below). The cost of the motor vehicle may be paid by executives through a salary sacriﬁcing arrangement.

Under the scheme, the VPS allows executives to choose an approved vehicle from a list of approved vehicles published by VicFleet for business and private use. The scheme is based on sharing costs between the executive and employer. The cost of the motor vehicle to the executive’s total remuneration package is calculated using a formula based on whole of ﬂeet costs.

This document is the policy which underpins this benefit.

A downloadable copy of the Scheme is available here:

Executive motor vehicle scheme Word 266.62 KB (opens in a new window)

The beneﬁts of this arrangement for an executive include:

tax beneﬁts, as costs are deducted from the pre-income tax component of remuneration
a comparatively inexpensive option for accessing a motor vehicle
provision of a fuel card (or for ZEVs, charge card or reduction in contributions to adjust for vehicle charging cost)
car parking at work
car is maintained, insured and serviced by the employer
provision of accident management services and manufacturer’s roadside assistance.

This document should be read in conjunction with:

The Standard Motor Vehicle Policy, which is a whole-of-Victorian-government policy to optimise the management and use of government motor vehicle assets for the benefit of departments, agencies and government overall; and
The Standard Motor Vehicle Requirements which sets out the detailed fleet management requirements for the whole of Victorian Government fleet for departments and agencies.

Both the policy and requirements documents are administered by VicFleet.

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Conditions for the Executive Motor Vehicle Scheme

The conditions for each party under executive motor vehicle scheme arrangements are outlined below.

Executives

pay 2/3 of the approved costs of the car plus any accessories agreed with the employer through a salary sacriﬁcing plan
may claim for more than 1/3 business use if a record of usage is kept over a three- month period
pay for e-TAGs
observe government motor vehicle policies and requirements
pay the fringe beneﬁts tax associated with the arrangement (if applicable)
may nominate other persons to use the vehicle for private purposes
ensure the vehicle is available for use for business use during business hours, if required.

Employers

approve the provision of the vehicle
meet 1/3 of the approved costs for business use
arrange provision of fuel card, charge card or reduction in pre-tax contributions
provide car parking at work site(s)
are responsible for the maintenance, insurance and servicing of vehicles, and arranges accident management services and manufacturer’s roadside assistance. Note: Vehicles are retained for a maximum of three years or 60,000km, whichever occurs sooner.

All public service employers are to use the standard motor vehicle costing methodology as outlined in the Executive vehicle cost to package section.

Part-time executives

Part-time executives may access an executive motor vehicle under the scheme where the employer agrees. The vehicle cost to a part-time executive is not pro-rated. If a vehicle is made available to a part-time executive, they are expected to meet the full costs from their remuneration package.

Temporary motor vehicle use

An employer may allow the use of an executive motor vehicle to a non-executive who is undertaking an executive role on a short-term temporary assignment. No deductions are made for the temporary vehicle use for the period of the assignment.

Novated leasing arrangement

An executive can access a motor vehicle solely for private use through a novated lease.

This arrangement is entered into with the agreement of the employer. The vehicle is arranged through a ﬁnance company and the employer facilitates the payments through a salary sacriﬁcing arrangement. The executive bears all costs of the vehicle. If the executive’s employment ends, the arrangement continues between themself and the ﬁnance company. Your employer will have more information about this arrangement.

Note:

The Government has a contract in place with providers of novated lease arrangements – refer to your employer.
Car parking is not provided by the employer as part of a novated lease or for a privately owned vehicle.

Fringe Benefits Tax

Fringe beneﬁts tax (FBT) is a tax incurred by employers when employees are provided with certain beneﬁts in respect of their employment. Beneﬁts provided through salary sacriﬁcing and some reimbursements of expenses may incur FBT.

A fringe beneﬁt is a beneﬁt received by a person in respect to their employment. A beneﬁt includes any right, privilege, service or facility.

A number of beneﬁts can be exempt from FBT. Refer to the ATO for more information on exempt beneﬁts.

For example, eligible electric cars and associated car expenses are exempt from Fringe Benefits Tax. See the ATO website for further information.

Executives

Executives must pay, from their TRP, any applicable FBT arising from their access to fringe beneﬁts (e.g. certain vehicles provided under the Executive Vehicle Scheme or novated lease).

Executives must complete a FBT declaration form outlining the business use of any beneﬁt that could be exempt from FBT.

Executives are advised to seek independent ﬁnancial advice to assist their decision making for maximising their beneﬁts. The ATO also has a number of publications on FBT that are useful.

Employers

Employers must:

keep records of FBT liability;
complete and lodge an annual FBT return with ATO by 21 May each year; and
provide executives with a payment summary of the total taxable value of the fringe beneﬁts received in an FBT year exceeding $2,000 (from 1 July 2007). The ATO uses the payment summary in income tests for a number of government beneﬁts, e.g. Medicare Levy. Employers can ﬁnd more information about their FBT obligations from the ATO, in particular, the ATO publication Fringe beneﬁts tax – a guide for employers.

Executive vehicle cost to package

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About the methodology

The Vehicle Costing Methodology is used to calculate the cost of a motor vehicle in an executive’s total remuneration package. The cost is notional – it represents value to the employee rather than cost to the employer.

The Executive Vehicle Scheme is a non-salary beneﬁt and may support attraction and retention of executives.

When to apply the methodology

A costing calculator is available to assist you to apply the methodology.

The most up-to-date calculator must be used to apply the methodology when either:

a new appointment is made, including existing executives moving to new positions at a different remuneration level or
an executive vehicle is changed over.

Treatment of zero emissions vehicles (ZEVs) under the methodology

Employer-leased ZEVs are currently exempt from FBT. This exemption is reflected in the calculator when an electric vehicle is selected from the drop-down menu under ‘running costs’. Please see the ATO website for further information.

When an executive chooses a ZEV, they have two options regarding vehicle charging. Similar to fuel cards for internal combustion engine vehicles (ICEVs), executives may opt to receive a charge card for use at commercial ZEV charging stations.

Alternatively, if an executive prefers to charge their vehicle at home, they may reduce their pre-tax contributions for the additional energy costs incurred by the executive, referred to as the Reduction in Contribution. If this option is chosen, the Methodology calculates the Reduction in Contribution, and the figure is subtracted from the annual cost to the executive. This means the executive is not paying twice to charge their vehicle.

Workplace charging may be permitted where capacity exists, however executives who choose the Reduction in Contribution are not permitted to routinely charge at the employer’s charging facilities as the Reduction in Contribution is intended to offset verified home charging costs. Employers can provide guidance to executives based on their operational requirements.

Executives are encouraged to consider which option is most appropriate based on personal circumstances (e.g. access to commercial charging stations or home charging). Only one option may be selected.

Details of the costing methodology

Total Cost to Employee Package = (Cost of Vehicle (Formula No. 1) + Fringe Beneﬁts Tax (Formula No. 2)) – Reduction in Contributions (Formula No. 3). Refer to the website for the vehicle costing calculator (link to Excel spreadsheet).

Formula No. 1 – Cost of Vehicle

Vehicle Cost = A + B + C

A = notional standing cost (registration and insurance) x private use percentage

B = notional standing cost (depreciation) x private use percentage

C = running cost x total annual kilometres x private use percentage

The notional value of registration and insurance is based on VicFleet data.

Depreciation captures the residual loss for the vehicle and is dependent on the vehicle purchase cost as well as the type of vehicle. The estimated depreciation is based on RACV data.

By assumption, the private use percentage is set to 2/3, and the total annual kilometres to 30,000. Both default figures can be adjusted if supported by appropriate justification. If the vehicle has a higher proportion of business use, the cost to the executive may be reduced. For a reduction in the private kilometre component, contact your ﬂeet manager. The executive will be required to complete a logbook for three months. The revised ﬁgures can then be used for ﬁve years (in line with ATO rules). If the executive changes roles, they will need to complete a new logbook for another three months. Refer to the ATO website for more details on the logbook method

Running costs (fuel, tyres, servicing etc.) are based on RACV data, and vary according to the type of vehicle.

Formula No. 2 – Fringe Beneﬁts Tax (if applicable)

Fringe beneﬁts tax = (Purchase price including GST) x FBT rate x FBT gross-up factor x statutory distance rate

Price is the Government purchase price of the vehicle (registration, stamp duty and cost of plates are not included).
GST is the full invoiced amount by the manufacturer/dealer.
The FBT rate is 0.47 (i.e. 47% expressed as a decimal) as per the ATO.
The FBT gross-up factor is 1.8868 as per the ATO.
The statutory distance rate is 0.20 (i.e. 20% expressed as a decimal) as per the ATO.

Formula No. 3 – Reduction in Contribution (if applicable)

Reduction in Contribution = Charging Rate x total annual kilometres.

The ATO has calculated the electricity costs incurred when a ZEV is charged at home, called the Home Charging Rate. The ATO calculated this as 4.20 cents per kilometre. Please see the ATO website for more information.

Executive vehicle cost-to-package calculator

Use the calculator to determine the cost of a motor vehicle in an executive’s total remuneration package.

Cost-to-package calculator Excel 144.19 KB (opens in a new window)

The previous version of the calculator is available for download here:

Executive vehicle cost-to-package-calculator pre-2025 Excel 123.19 KB (opens in a new window)

Governance

Updated 22 December 2025

Economic Growth Statement

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Executive Motor Vehicle Scheme

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