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FBT and Utes

David Rynne - Friday, August 23, 2013

 

Fringe Benefits Tax (FBT) is a tax on employers who provide certain non-cash benefits to staff. With the recent tax changes to the FBT rules for motor vehicles, we are starting to see some clients taking interest in utes and dual-cab vehicles.

Utes are regarded as commercial vehicles and may be exempt from FBT. For the exemption to apply to these vehicles, the private use must be limited to:

- Travel between home and work;
- Travel that is incidental to the normal course of employment; and
- Non-work related use that is “minor, infrequent and irregular”

So if an employee is allowed to use the vehicle as they wish to on weekends, arguably the FBT exemption would not apply and employer could be slugged with an FBT bill.

There is a strict definition of whether a commercial vehicle qualifies as a utility. The ATO has published on its website a list of vehicles to which the exemption may apply.

http://ato.gov.au/General/Fringe-benefits-tax/In-detail/Exemptions-and-concessions/FBT---exempt-motor-vehicles/?default&page=4#Dual_cabs_manufactured_2012

Remember: FBT only applies where there is an employment relationship. If you are a sole trader or partner in a partnership, FBT is not applicable to you personally but it may be relevant if you have staff.