Fringe Benefits Tax (FBT): employees’ private use of vehicles
The Australian Taxation Office has issued guidance for employers on determining an employee’s private use of a vehicle.
Draft Practical Compliance Guideline PCG 2017/D14 should provide more certainty and transparency about the circumstances where the ATO won’t apply compliance resources to investigating whether private vehicle use meets the car-related FBT exemptions.
Eligible employers who rely on this guideline won’t need to keep records to prove that an employee’s private use of a vehicle is minor, infrequent and irregular.
The eligibility conditions include the provision of an eligible vehicle, with no non-business accessories, to an employee to for work duties that is not part of salary-sacrifice arrangement, costs less than luxury car tax threshold and all steps have been be been taken to limit private use.
The vehicle must travel from home to work with diversion allowance of less than 2 kilometres, does not have a single private trip of more than 200 kilometres and total private trips of no more than 750 kilometres during FBT year.
One complying illustration is an employee who stops at a newsagent to pick up a paper (for personal use) on the way to work, but the diversion adds less than 2 kilometres to the total journey.
The same employee who travels from work to football practice which is more than 2 kilometres diversion from usual work to home travel will not be able to use this ruling.
Given the complexities this may generate, we suggest you talk to us about whether the new guidance applies to your FBT circumstances.