While we all know that using a fuel card can help to streamline fuel administration and bookkeeping, it’s imperative that businesses stay up to date on all their vehicle tax obligations. An often misunderstood area of vehicle expense management is Fringe Benefit Tax requirements (“FBT”).
The Australian Taxation Office (“ATO”) has provided useful guidelines in relation to FBT:
- A fringe benefit is a benefit provided in respect of employment. This effectively means a benefit is provided to somebody because they are an employee*.
- According to the ATO, a car fringe benefit most commonly arises where an employer makes a business owned or leased car available for the private use of an employee**.
How do you know if a particular vehicle in your business’s fleet may be subject to fringe benefit tax?
​According to the ATO, only some vehicle types are classified as a car for the purposes of FBT. They also have guidelines around when a vehicle may be classified as being available for private use. As at the date of this article, the ATO has classified the following types of vehicles (including four-wheel drive vehicles) as cars for the purposes of FBT and provide the below classifications around availability for private use***.
| Vehicles which may be classified as a car |
May be considered Available for Private use if |
motor car
station wagon
panel van |
the car is actually used for private purposes by the employee |
| four-wheel drive vehicle utility (excluding panel vans and utilities designed to carry a load of one tonne or more) |
the car is available for the private use of the employee |
| Goods-carrying vehicle designed to carry less than one tonne |
the vehicle is not always at your business premises, and available for the employee to use for private purposes |
| Passenger-carrying vehicle designed to carry fewer than nine occupants |
if the vehicle is garaged at the employee's home |
If you answer Yes to at least one of the above, your business vehicle may be subject to fringe benefit tax.
What should you do if you think your vehicle may be subject to fringe benefit tax?
The information in this article is of a general nature only, is not intended to be financial, tax or legal advice and is not a substitute for professional advice.
If you think your vehicle may be subject to fringe benefit tax, you should seek professional taxation advice from a registered accountant. They will provide personalised advice to help you confirm any taxation implications and advise you on how to best manage any regulatory or taxation implications that may occur. Viva Energy recommends that you seek independent tax, financial and business advice in relation to any tax (including fringe benefit tax) implications to you.
To learn more about vehicle fringe benefit tax check out this handy video from the ATO
The above information contains references information from and links to third party websites these references are accurate as at the date of publication of this article.
*https://www.ato.gov.au/General/Fringe-benefits-tax-(FBT)/In-detail/Employers-guide/What-is-FBT-/
**https://www.ato.gov.au/General/Fringe-benefits-tax-(FBT)/In-detail/Employers-guide/What-is-FBT-/?page=4#Car_fringe_benefit
***https://www.ato.gov.au/General/Fringe-benefits-tax-(fbt)/In-detail/Employers-guide/Car-fringe-benefits as at [2/05/2017]