The ATO has recently revised its guidance on how fringe benefits tax (“FBT”) applies in relation to the private usage of work vehicles.
Previously the ATO issued a definitive list of eligible work-use vehicles (typically tradie, dual cab and panel vans etc), but from 1 April 2017 this list has been withdrawn and employers now have to self-assess.
In the past this law has always been about minor, infrequent travel for work vehicles, but this new ATO guidance puts the onus very much on the employer to prove that work cars are not used just as a perk to retain and attract staff. The ATO’s guidelines now suggest that a vehicle’s private use cannot exceed 1,000km in a year, and no return journey can exceed 200km. This is thought to be much more restrictive than previously understood.
While home to work travel is generally not considered private for these work vehicles, according to these new guidelines, any trip in which a home to work route varies by more than 2km will be considered a personal trip.
This new approach will potentially catch many employers unaware as they have in the past assumed that “work vehicles” (ie on the eligible vehicles list), means no FBT.
Our advice to clients who provide these work vehicles to employees is to make sure you have a policy on work-related vehicles and make sure you can monitor how it is enforced.