The Fringe Benefits Tax (FBT) year end is 31 March.
The ATO are set to review FBT reporting obligations with a particular focus on Motor Vehicles.
Over the last year, our clients have asked us if there is any exemption for the private use of a motor vehicle. Yes, it is exempt from FBT if all of the following conditions are satisfied:
- the vehicle is a panel van, utility (ute) or other commercial vehicle (that is, one not designed principally to carry passengers)
- the employee’s private use of such a vehicle is limited to
- travel between home and work
- travel that is incidental to travel in the course of duties of employment
- non-work related use that is minor, infrequent and irregular (for example, occasional use of the vehicle to remove domestic rubbish)
Essentially the only way you can prove you comply with the guidelines in PCG 2018/3 is to complete a logbook.
For the vehicle to be eligible for the FBT exemption, and for non-work related use to be considered ‘minor, infrequent and irregular’ the criteria are below:
(a) you provide an eligible vehicle to a current employee
(b) the vehicle is provided to the employee for business use to perform their work duties
(c) the vehicle had a GST-inclusive value less than the luxury car tax threshold at the time the vehicle was acquired. $57,581 is the current threshold
(d) the vehicle is not provided as part of a salary packaging arrangement and the employee cannot elect to receive additional remuneration in lieu of the use of the vehicle e.g. the employee cannot choose the vehicle, if the employee is a director or associate it would be hard to argue
(e) you have a policy in place that limits private use of the vehicle and obtain assurance from your employee that their use is limited to use as outlined in subparagraphs (f) and (g) of this paragraph
(f) your employee uses the vehicle to travel between their home and their place of work and any diversion adds no more than two kilometres to the ordinary length of that trip, and
(g) for journeys undertaken for a wholly private purpose (other than travel between home and place of work), the employee does not use the vehicle to travel:
- more than 1,000 kilometres in total, and
- a return journey that exceeds 200 kilometres.
The ATO have recently issued guidance on what their compliance approach to ‘minor, infrequent and irregular’ usage would be
Exempt car benefits and exempt residual benefits: compliance approach to determining private use of vehicles
So even if you complete a logbook – private trips must meet the requirements in paragraphs F & G, otherwise FBT will still apply (albeit at the reduced percentage based on the overall logbook).
What action is required?
- Ensure you have a compliant logbook and all the required documentation to support your business usage. You can download this sample logbook for your use, if required.
- Contact us to discuss any Fringe Benefits provided to your employees
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