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ATO Get All Sporty Over Employers Claiming FBT Exemptions for Utes and Dual Cabs

Did you know that staff from the ATO enjoy a Saturday afternoon at the Footy? We’re talking MCG & SCG. They also like to go shopping at Castle Hill Towers on a Saturday.

But guess what? They’re not in the grandstand or corporate box cheering on their team, they spend the day in the car park taking note of commercial vehicles, utility vehicles, dual cabs and other “exempt” vehicles.

What they are trying to determine (after noting down registrations and company names – from the signwriting on the vehicles) is whether those vehicles are included in FBT returns.

Specifically, they are trying to determine if an employer is incorrectly claiming exemption for those vehicles.

To meet the exemption criteria, firstly the vehicle must meet the criteria of MT2024 or be included on the ATO list of exempt vehicles. http://www.ato.gov.au/businesses/content.aspx?doc=/content/00167339.htm

Secondly, private use must be limited to:

  • travel between home and work
  • travel that is incidental to travel in the course of duties of employment
  • non-work related use that is minor, infrequent and irregular (for example, very occasional use of the vehicle to remove domestic      rubbish may be acceptable).

If your employee’s use of the car exceeds the above then FBT will apply.

If no log book records are maintained, the percentage of private use will be 100%. FBT would be payable using the statutory formula method. With the change in statutory fractions, there has never been a better time to consider a logbook.

A key difference in the rules relating to exempt cars and the log book requirements, is in relation to home to work and work to home travel. Under the logbook method, home to work and work to home travel is generally regarded as private travel. Whereas, when analysing whether an employee’s use of a vehicle is exempt, home to work and work to home travel is effectively accepted as business travel.

Importantly, the onus of responsibility (and liability to FBT) is with the employer. Therefore, employers must have a robust policy and ensure that the policy is not only being followed, but also being consistently reinforced.

3 areas of FBT exemptions and concessions to consider:

Step 1 – Relocation costs

Storage and removal of goods

Relocation transport including familiarisation trips

Connection of utilities

Relocation consultant

Step 2 – Temporary accommodation

Up to 12 months free of FBT

Step 3 – Sale of former residence / purchase new residence

Exemption for stamp duty and incidental selling & acquisition costs