There have been recent media articles highlighting the ATO’s concerns with certain ‘tradie’ type vehicles. The concern is that such vehicles provided to staff do not have private usage limited to home-work travel and other private travel that is minor, infrequent and irregular.
The ATO are on record as stating:
- “If an employee’s use of a dual-cab ute doesn’t meet the conditions of limited private use, it’s a car fringe benefit, or residual benefit and FBT applies.”
- “If you or your employees drive the work ute to weekend footy matches, tow the boat to go fishing on Sundays, or going on camping trips, it’s likely you’ll go above and beyond the definition of ‘limited private use.”
As a refresher, motor vehicles designed to carry a load of 1 tonne or more are eligible for FBT exemption provided usage of the vehicle is limited to:
- home to work (including alternative work sites) travel; and
- other private travel that is minor, infrequent and irregular (refer ATO PCG 2018/3 for a discussion of when use is accepted as minor, infrequent and irregular).
An equivalent exemption also applies to certain cars (i.e. <1 tonne carrying capacity) that are not mainly designed to carry passengers. Most dual cab cars fall within this category on the basis load carrying capacity, using the ATO 68kgs per passenger test, is not mainly designed for carrying passengers – see MT 2024 re the 68kgs per person test and the ATO website for more.
The ATO focus forms part of a wider crackdown on motor vehicle issues highlighted by the ATO as part of their motor vehicles registries data-matching program.
Information will be acquired from state and territory motor vehicle registry authorities where their records indicate that both:
- a vehicle has been transferred or newly registered during the 2022–23, 2023–24 and 2024–25 financial years
- the purchase price or market value is equal to or greater than $10,000.
Given FBT is paid by the employer, it may be prudent for employment arrangements to be reviewed to ensure private usage is limited and within the scope of the exemption. It may also be appropriate to make arrangements for the employee to be required to reimburse any FBT cost in the event that unauthorised private use of the vehicle results in it not satisfying the exemption conditions.
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