FAQ
Employee Contribution Method
What is the Employee Contribution Method (ECM)?
The taxable value of a car fringe benefit can also be reduced by a "recipient's payment", often referred to as an employee contribution. An employee can make an "employee contribution" to reduce the taxable value of a car fringe benefit by personally incurring car expenses during the FBT year, for which they receive no reimbursement. For every $1 contributed, the taxable value is reduced by $1. This is a tax effective way of packaging when your personal tax rate is lower than the highest marginal tax rate, because FBT is taxed at the highest rate.
See also ECM Overview for a more detailed explanation.
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