When many businesses commence their operations in mid to late January, there will be less than 10 weeks to the end of the 2019 FBT year.  It is a good time now to review the changes in the treatment of Utilities (utes) and Vans for Fringe Benefits Tax (FBT) purposes since the ATO first announced them in July 2017.

Before the changes were announced, when providing an ute or a van to an employee, business relied upon a phrase in the FBT Act that a liability for FBT will not arise where the non-work-related use is “minor, infrequent and irregular”.  However, the ATO believes some business have misunderstood the law and decided to published a set of guidelines in PCG 2018/3 to define what they would accept as “minor, infrequent and irregular”.

For businesses who have followed these guidelines, the ATO will not apply compliance resources to determine whether the private use of the vehicles was “minor, infrequent and irregular”.  In other words, as long as the business can provide enough evidence to prove that they satisfy all the guidelines, it does not need to keep records to demonstrate that the use of the vehicle by the employees were “minor, infrequent and irregular”.

The guidelines are as follows:

  • The vehicle provided is a panel van, ute or other commercial vehicle that is not designed principally to carry passengers;
  • The vehicle was provided to the employee for business use to perform their duties;
  • The vehicle, including GST, was less than the luxury car tax threshold when it was purchased (from $61,884 in 2014/2015 to $66,331 in 2018/2019);
  • The vehicle was not provided as a salary packaging arrangement and the employee cannot elect to receiving additional remuneration in lieu of the use of the vehicle;
  • The business
  • Has a policy in place that limits private use of the vehicle of the vehicle, and
  • Obtained assurance from employees that their use is limited to the following:
  • When travelling between home and work, any diversion does not add more than 2km to the ordinary length of that trip,
  • For wholly private trips (other than between work and home), the employee does not use the vehicle to travel (in a FBT year):
  • More than 1,000km, and
  • A return trip that exceed 200km;

Should you have any questions on this matter or want an FBT assessment on your current arrangement please contact me or our team at CSCG.

The article is only current at the time it is written and could be out of date before you read it.  The information contained on this article is only intended to draw your attention to issues you should further discuss with your accountant/lawyer and the reader should accept full responsibility for its use.  The information on this article is provided with the understanding that the author and publisher are not herein engaged in providing professional advice or services.  As such, before making any decision or taking any actions, the reader should always consult their accountant/lawyer.  We disclaim any responsibility for actions taken on the above without further advice as to your particular circumstances.