Fringe Benefits Tax (FBT) - Are commercial vehicles exempt?

May 2019

Commercial vehicles such as certain types of utes, dual cab utes, four wheel drives etc, may be exempt from FBT.

To be eligible for this exemption, the private use of these types of vehicles by employees (other than travel between their home and work), must be minor infrequent or irregular.

To help employers clarify what private use qualifies as minor, infrequent or irregular, the ATO have released Practical Compliance Guideline PCG 2018/3. 

According to PCG 2018/3, the private use of an eligible vehicle is minor, infrequent or irregular where: 

A diversion from travelling between home and work adds no more than two kilometres to the length of the trip

Wholly private purpose trips do not exceed 1,000 kilometres in total and a return journey that exceeds 200 kilometres

Employees complete and sign a declaration stating that their private use qualifies for the exemption 

Where the private use of the vehicle exceeds the above thresholds, then the vehicle is not automatically exempt from FBT and the employer becomes liable to FBT on the private use of the car.

Employers should review how private use of vehicles is currently being monitored, as well as ensure employment contracts and internal policies clearly communicate what private use is allowed.

For more information, please contact your Cutcher & Neale advisor.

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Topics: Business, Small to Medium Business, Fringe Benefits, FBT, Company Vehicle

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