The ATO have warned tax agents they will be investigating businesses who incorrectly classify vehicles as eligible for the FBT exemption, including type of car and usage
Vehicles eligible for the exemption
The following vehicles are eligible for the limited private use exemption:
- a single cab ute
- a dual cab ute that is designed to either
– carry a load of 1 tonne or more
– carry more than 8 passengers (including the driver)
– carry a load of less than 1 tonne but is not designed for the principal purpose of carrying passengers.
– the designed load capacity of a motor vehicle is to be taken as the gross vehicle weight as specified on the compliance plate by the manufacturer (broadly, the maximum all-up loaded weight), reduced by the basic kerb weight of the vehicle. For this purpose, basic kerb weight is synonymous with unladen weight, as specified in the Australian Design Rules, being the weight of the vehicle with a full tank of fuel, oil and coolant together with spare wheel, tools (including jack) and installed options. It does not include the weight of goods or occupants. - a panel van or goods van
- a modified vehicle (such as a hearse) if, for the entire FBT year when the car is used by the employee, the modification permanently affects the inherent design of the vehicle.
- a taxi
- any 4-wheel drive vehicle that is designed either
– to carry a load of 1 tonne or more
– to carry more than 8 passengers (including the driver)
– for a principal purpose other than carrying passengers, as indicated by its appearance, marketing specification or carrying capacity - any other road vehicle that is designed to carry either
– a load of 1 tonne or more
– more than 8 passengers (including the driver).
Eligible Usage
The private use of a motor vehicle is exempt from FBT if all of the following conditions are satisfied:
- 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).
If the vehicle use is incorrectly declared it could cost you, as the employer, thousands of dollars.
Action required
- Ensure the vehicle falls within the eligible vehicles’ definition. If it is a dual cab the load capacity must be looked at carefully
- Ensure you have a written policy in place that limits private use of the vehicle and obtain assurance from your employee that their use is limited to use as follows:
– 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
– 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 per annum, and
— a return journey that exceeds 200 kilometres. - Ensure Employee’s Declarations are completed and signed for every FBT year
- If you have any doubt about the extent of private use you should have the employee complete a log book for 12 weeks and pay the FBT on private use if applicable
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