Are there any fringe benefits implications for reimbursement of the cost of annual driver’s licence renewal fees?
Does it depend on the type of driver’s licence? For example, some employees are required to hold endorsed licences that allow them to drive heavy vehicles as part of their job role, in addition to their car licences.
There is a requirement in each employment contract to have current driver licence.
The reimbursement of the annual drivers licence renewal is an expense payment fringe benefit and FBT will be generally payable unless the otherwise deductible rule can apply. In other words, would the employee have been able to claim as a tax deduction the cost of the annual licence renewal?
The ATO view is while the holding of a driver’s licence may be a condition of employment, it does not follow that the licence fees are deductible. They are private in nature and accordingly not deductible as the right to drive on the public roads does not cease to be a private right merely because the taxpayer is employed in some capacity which involves the use of the public road system.
However, if the employee requires an endorsed licence to undertake their job position, the cost of any endorsement over and above the general licence cost is deductible.
Refer to Taxation Determination TD 93/108 for further discussion on the deductibility of licence fees.