The ATO’s FBT Hot Spots

The Fringe Benefits Tax (FBT) year ends on 31 March. Below are the key hot spots for employers and employees.
  • Motor Vechicles

    Just because your business buys a motor vehicle and it is used as a work vehicle, does not mean that the car is exempt from FBT.  If the car is used for private purposes – pick the kids up from school, do the shopping, used freely on weekends, garaged at home, a spouse uses it – FBT is likely to apply. The private use of work vehicles is firmly in the sights of the ATO.

  • Utes and commercial vehicles

    Some exemptions to FBT apply to utes and commercial vehicles where the private use is deemed to be minor, infrequent and irregular.  The challenge is how to determine whether the use is minor, infrequent and irregular.  We have listed the ATO guidelines on qualifying for the exemption at the end of this article

  • Car parking

    The ATO has noticed that where car parking benefits are being declared, the value of what is being declared is significantly less than what you would expect to pay.

  • Living away from home allowances

    FBT applies to the full amount of the allowance that has been paid. However, if certain strict conditions can be satisfied the taxable value of the LAFHA fringe benefit can be reduced by the exempt accommodation and/or food component.

  • Salary sacrifice or employee contributions?

    One issue that frequently causes confusion is the difference between the employee salary sacrificing in order to receive a fringe benefit and making an employee contribution towards the value of that fringe benefit.  The ATO is looking for discrepancies for income tax and GST purposes, as well as on the FBT return.

Utes and commercial vehicles – Exception Guidelines

  • The employer provides an eligible vehicle to the employee to perform their work duties. An eligible vehicle is generally a vehicle for commercial purposes. The requirements are very strict and guidance on this is published on the ATO website.
  • The employer takes reasonable steps to limit private use and they have measures in place to monitor this – this might be a policy on the private use of vehicles that is monitored using odometer readings to compare business kilometres and home to work kilometres travelled by the employee against the total kilometres travelled.
  • The vehicle has no non-business accessories – for example a child safety seat.
  • The value of the vehicle when it was acquired was less than the luxury car tax threshold ($75,526 for fuel efficient vehicles in 2017-18 and $65,094 for other vehicles).
  • The vehicle is not provided as part of a salary sacrifice arrangement; and
  • The employee uses the vehicle to travel between their home and their place of work and any diversion adds no more than two kilometres to the ordinary length of that trip, they travel no more than 750 km in total for each FBT year for multiple journeys taken for a wholly private purpose and, no single, return journey for a wholly private purpose exceeds 200 km.