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ATO’s new guidelines for FBT exemption on vehicles

Luxury Car tax
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The ATO has released draft guidelines to eliminate confusion and more closely define FBT exempt benefits for work vehicles and their private use.

Guidelines will be enforceable by the end of the 2019 FBT year. Employers could be forced to pay a 20 per cent FBT compulsory tax payment on the cost of the vehicle if they fail to comply.

Employers who make a vehicle they hold available to their employees for work related or private use fall within the scope of the ATO’s new fringe benefit guidelines.This fringe benefit may only remain an exempt benefit if other private use of the vehicle is minor, infrequent and irregular.

Private and non-private use

The ATO has determined that the vehicle cannot deviate more than two kilometres from its usual route to and from work if it is to be classified as professional travel. The reason being that any deviations larger than two kilometres mean the primary purpose of the trip is no longer work-related. Dropping the kids off to school before work, adding 500 metres to the route, is professional travel. Attending sports training after work, deviating five kilometres, is private use.  

Non-work related travel of 1000km is permitted provided that there is no single trip exceeding 200km. A single trip to visit the relatives or grocery run will not leave employers non- compliant so long as their employees record that the trip was non-professional travel.

Logbook requirements

Employers must ensure their workers keep detailed logbooks with regard to their use of their vehicles. Regardless of whether the logbook is electronic or not, the distance of the journeys must be recorded every time the vehicle is used for wholly private purposes. The records must be emailed to employers before the end of the FBT year.

For an electronic logbook download the app My Accountant DFK Crosbie App which has automatic GPS tracking set up through the logbook.

Eligible Vehicles

Check the ATO to see if your vehicles are eligible. Keep in mind that these guidelines have recently changed to include single and dual cab utes.

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