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Fringe Benefits Tax and Employee Use of Motor Vehicles

Now that the Fringe Benefits Tax (FBT) year has just ended, it is important to make sure that issues regarding benefits provided to employees and associates are considered.

Fringe Benefits Tax and Employee Use of Motor Vehicles

FBT is a tax paid by employers on certain benefits provided to their employees, or to their employees’ family or other associates.

FBT is separate to income tax. It’s calculated on the taxable value of the fringe benefit.

The FBT liability is self-assessed for the FBT year (1 April to 31 March). If there is an FBT liability, there is an obligation to lodge an FBT return and pay the FBT owed.

One of the most common Fringe Benefit is employee use of motor vehicles owned by the employer.

There are several vehicles that are exempt from FBT. The main types of vehicles that this applies to are;

  • a single cab ute
  • a dual cab ute that is designed to either
    • carry a load of 1 tonne or more
    • carry more than 8 passengers (including the driver)
    • carry a load of less than 1 tonne but is not designed for the principal purpose of carrying passengers if the private use is minor or infrequent.
  • a panel van or goods van

The FBT exemption for road vehicle designed to carry a load of less 1 tonne and not principally designed to carry passengers (such as a Ford Ranger dual cab ute) will apply if journeys undertaken are for a wholly private purpose (other than travel between home and place of work) and the employee or associate does not use the vehicle to travel

  1. more than 1,000 kilometres in total over the FBT year, and
  2. a return journey that exceeds 200 kilometres.

If this applies, the employer must obtain employee declarations stating that the use was minor as above by the time your FBT return is due to be lodged. If you don’t have to lodge a return, you must have the declarations by 21 May.

Employee declarations must be kept with your business records for 5 years.

How can we help?

This is a very brief overview of just some of the Fringe Benefits Tax requirements in relation to motor vehicles. There are many other issues that will affect a potential FBT liability.

If you feel that you are providing a motor vehicle benefit or any other type of benefit to an employee or associate and would like more detailed information, please contact our office.