FBT Q&A – How are private trips in a ‘workhorse vehicle’ treated where an employee is provided with accommodation by the employer on Monday to Friday but returns ‘home’ on the weekend?

Question

How are private trips in a ‘workhorse vehicle’ treated where an employee is provided with accommodation by the employer on Monday to Friday but returns ‘home’ on the weekend?

Answer

We understand the vehicle is of a type that may be eligible for FBT exemption under section 8(2) of the Fringe Benefits Tax Assessment Act 1986  (the FBT Act). The vehicle in question is a dual cab ute that is not principally designed to carry passengers – refer MT 2024) .

The section 8(2) exemption is conditional on private use being limited as follows:

‘there was no private use of the car during the year of tax and at a time when the benefit was provided other than:

(i)  work related travel of the employee; and

(ii)  other private use by the employee or an associate of the employee, being other use that was minor, infrequent and irregular’

We understand in this case the only private use permitted by the employer is the ‘home to work’ trips during week (to/from the employer provided accommodation and to/from the employee’s home on Friday afternoon and Monday morning – a 200km one way trip!).

The question is whether the private travel undertaken fits the definition of ‘work-related travel’.

‘Work related travel’ is defined in section 136 of the FBT Act as:

‘work related travel’, in relation to an employee, means:

(a)  travel by the employee between:

(i)  the place of residence of the employee; and

(ii)  the place of employment of the employee or any other place from which or at which the employee performs duties of his or her employment; or

(b)  travel by the employee that is incidental to travel in the course of performing the duties of his or her employment.’

The question then becomes what is the person’s ‘place of residence’ in the facts of the case?

Section 136 of the FBT Act defines ‘place of residence, in relation to a person, as:

(a)  a place at which the person resides; or

(b)  a place at which the person has sleeping accommodation;

whether on a permanent or temporary basis and whether or not on a shared basis’.

We think it is fair to conclude that both the Monday/Friday employer provided accommodation and accommodation at home on the weekend are each a ‘place of residence’ on that day and therefore all of those trips are ‘work related travel’ and within the section 8(2).

It does not matter how far the trip from home to work provided it is a home to work trip (or within the definition of ‘work related travel’ to be precise).

This article provides a general summary of the subject covered and cannot be relied upon in relation to any specific instance. It is not intended to be, nor should it be relied upon as, a substitute for professional advice. TaxEd Pty Ltd and any person connected with its production disclaim any liability in connection with any use.

This article provides a general summary of the subject covered as at the date it is published. It cannot be relied upon in relation to any specific instance. TaxEd Pty Ltd and any person connected with its production disclaim any liability in connection with any use. It is not intended to be, nor should it be relied upon as, a substitute for professional advice.