FBT Exemptions Clarified

Posted by Michael Kirby on Jun 1, 2018 7:00:00 AM

The ATO recently issued a Draft Practical Compliance Guideline PCG 2017/D14 which was designed to provide individuals more transparency and certainty about when the ATO won't apply compliance resources to determine whether the private use of a vehicle qualifies as an exemption from FBT.

Eligible employers who reply on this guideline don't need to keep records to prove that the private use of a vehicle by an employee was minor, irregular and infrequent, and the ATO won't review the employer's access to car-related exemptions for said employee.

Are you an eligible employer?

An employer can rely on the guideline if:

  • The employer provides the employee with an eligible vehicle in order for them to carry out their work related duties
  • reasonable steps are put in place by the employer to limit private use of said vehicle, with measures in place to monitorthis
  • No non-business accessories are in the vehicle
  • At the point of purchase/acquisition, the GST inclusive value is under the luxury car tax threshold
  • The vehicle isn't provided as a part of any salary packaging arrangement, and the employee cannot choose to receive any additional remuneration as oppossed toto using the vehicle
  • The vehicle is used to travel between home and work by the employee, and
    • additional diversions don't add any more than 2km to the normal travel length of that trip
    • no one, return journey for an entirely personal drive exceeds 200km.
    • no more than 750km of travel in total for each FBT year for multiple journeys is for a wholly private purpose
    • multiple journey's for entirely personal purposes does not exceed 750km total for each FBT year

Employers will need to assess their eligibility to rely on said guidelines on a yearly basis

Examples of when employers can rely on the guideline include:

  • Entirely personal travel (taking a relative to school 12 times per FBT year) and incidental travel (making regular stops at a newsagent)
  • An employee who travels a total of 20,000km and whose personal vehicle use involves taking domestic rubbish to the tip (return trip - 100km) and moving house three time (200km total)

Examples of when employers cannot rely on the guideline include:

  • Driving to attend weekly sport training, where the travel adds over 2km to the regular journey from home to work
  • Private travel, including sole return trips of 300km

Upon finalisation, the guideline will apply to both car and residual benefits provided from the start of the 2017 - 2018 FBT year, (1st April 2017).

Fringe Benefits can be very complex. If you wish to discuss your FBT requirements, don't hesitate to contact your XO Accounting advisor. 

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