Fringe Benefits Tax (FBT) exemption for minor private use of vehicles

The Commissioner has outlined the circumstances in which the ATO will not apply compliance resources to determine if the private use of an eligible vehicle was limited for the purposes of the car-related exemptions.

Employers can choose to rely on this Guideline if:

(a) they 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

(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) the employer has a policy in place that limits private use of the vehicle and obtain assurance from its employee that their use is limited to use as outlined in subparagraphs

(f) its 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 km in total, and

– a return journey that exceeds 200 km.

Where employers choose to rely on the Guideline:

  • they do not need to keep records about their employee’s use of the vehicle that demonstrate that the private use of the vehicle is minor, infrequent and irregular, and
  • the Commissioner will not devote compliance resources to review that the employer can access the car-related exemptions for that employee.

However, employers will need to check that they continue to meet the requirements of the Guideline in each year they provide the vehicle and wish to rely on the Guideline.

There are some minor changes between the draft and the final Guideline, in particular, to clarify the monitoring requirements for the purposes of an employer relying on the Guideline, to remove the requirement that the vehicle have no non-business accessories and to increase the annual kilometre threshold for private travel that is “minor, infrequent and irregular”.

…Should you be interested in finding out more about the fringe benefit tax exemption for minor private use of care, please do not hesitate to contact us on (02) 8318 1545 

Posted in News & Events, Tax Updates.