Did you know that the van or ute or dual cab you provide to employees (or yourself as owner/ director of the business) may be subject to Fringe Benefits Tax (FBT)?
There is a common misconception that ‘work-horse’ vehicles such as utes (single cab and certain dual cabs) or panel vans or other commercial vehicles (that is, one not designed principally for carrying passengers) are automatically exempt from FBT.
However, this is only the case if private use is limited to minor, infrequent and irregular travel. The ATO released draft guidelines in December 2017 on what constitutes limited private use of work-horse vehicles. And it is applicable to the 2018 FBT year! Without doubt, the release of these guidelines shines a strong spotlight on the FBT obligations and risks for work-horse vehicles.
Another common misconception is that dual cabs are work-horse vehicles and therefore FBT exempt. However, as these are often designed for the principal purpose of carrying passengers it is likely they do not meet the ‘eligible’ vehicle exemption!
If the new guidelines are implemented, then at a minimum, businesses will be required to keep detailed travel records just to prove the vehicle is exempt as a work-horse vehicle. However, it is likely that more work-horse vehicles will be caught out and attract FBT.
If you require further advice on FBT or the tax implications of benefits you are providing employees, please contact us.