Under the statutory formula method of calculating a car fringe benefit, does a car fringe benefit arise where an employee who regularly travels to rural areas as part of their duties, and who regularly stays at motels overnight whilst on work-related travel, is provided with an employer provided car to undertake the travel?
Under the statutory formula method, a car benefit will arise at any time of day in respect of the employment of the employee where a car held by the provider is either:
- applied to a private use by the employee or associate, or
- taken to be available for the private use of the employee or associate of the employee.
For the purposes of (ii) above, a car shall be taken to be available for private use where it is garaged or kept at or near a place of residence of the employee or an associate of the employee. Subsection 136(1) of the FBT Act defines a ‘place of residence’ as:
- a place of residence at which the person resides; or
- a place at which the person has sleeping accommodation,
whether on a permanent or temporary basis and whether or not on a shared basis.
Where an employee is travelling away from home, accommodation in the form of a motel/hotel room or caravan is ‘sleeping accommodation’ that is used on a temporary basis and so would be considered a ‘place of residence’.
We note that there appears a strong ground to argue the employee is on work-related travel when on such travel and so use of the operating cost method is likely to provide a significantly more favourable FBT outcome.
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