FBT exemption for minor private use of vehicles

Fringe Benefit Tax Update

The ATO has this week finalised the guideline relating to the “minor, infrequent and irregular” use of Fringe Benefit Tax (FBT) exempt motor vehicles, and there are some notable changes from the previously released draft guideline.

These updates can affect any business that provides utes, vans and similar exempt vehicles to their employees and Directors.

Employers can rely on the exemption from FBT provided under this guideline, if:

  • they provide an eligible vehicle to a current employee
  • the vehicle is provided to the employee for business use to perform their work duties
  • the vehicle had a GST-inclusive value less than the luxury car tax threshold ($57,581 as at 1 July 2018) at the time the vehicle was acquired
  • 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
  • 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) and (g)
  • its employee uses the vehicle to travel between their home and their place of work and any diversion adds no more than 2km 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 1,000km in total, and (this was 750km in the draft guideline)
    • a return journey that exceeds 200km.

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.

The FBT year is already more than 3 months in, and we recommend reviewing your policies to ensure you can access this FBT concession.

If you would like to discuss this guideline in more detail, or discuss any other FBT related queries your business has, please do not hesitate to contact the Brentnalls WA team.