20.2 Transport exemptions
Legislative reference: section 8External Link of the FBTAA.
There are circumstances in which private use of a car may be exempt from FBT.
An employee's private use of a taxi, panel van or a utility designed to carry less than one tonne, or any other road vehicle designed to carry a load of less than one tonne (that is, one not designed principally to carry passengers) is exempt if their private use of such a vehicle is limited to:
- travel between home and work
- travel that is incidental to travel in the course of performing employment-related duties
- non-work-related use that is minor, infrequent and irregular – for example, occasional use of the vehicle to remove domestic rubbish.
Example: Exempt use
An electrical company employee takes the company van (carrying capacity of less than one tonne) home each night because there is no security at the company premises. The only non-work-related use during the FBT year was a trip to pick up some furniture and take it to the employee's home – this use of the van would be exempt from FBT.
If the use of the vehicle exceeds the limits set out above, it is a car fringe benefit. All the private use of the vehicle, including the travel between home and work, is taken into account in determining the business percentage under the operating cost method. If no logbook records are maintained, the statutory formula method must be used to value the car fringe benefit.
Where the vehicle is not a car as defined in section 7.1 of Car fringe benefits, a residual benefit will arise (refer to section 18.6 of Residual fringe benefits).
Example: Non-exempt use
A council employee takes a utility (carrying capacity of less than one tonne) home each night and on the weekends. Although the utility is clearly marked as a council vehicle, the employee uses it for shopping and other private purposes during the week and often for country trips on the weekends.
This use of the utility would not be exempt from FBT and would be treated as a car fringe benefit. Assuming there are no logbook records, the taxable value of the utility would be calculated using the statutory formula method.
End of example
Dual cab vehicles
Dual cab vehicles are variants of conventional goods vehicles, with additional seating positions behind the driver and front passenger seats. They share a common chassis, to which the single or dual passenger cab and alternative tray sections may be fitted.
Dual cabs qualify for the work-related use exemption only if they are either:
- designed to carry a load of one tonne or more, or more than eight passengers, or
- while having a designed load capacity of less than one tonne, are not designed for the principal purpose of carrying passengers.
A dual cab that has a designed load-carrying capacity of less than one tonne may qualify for the work-related use exemption only if the vehicle is not designed for the principal purpose of carrying passengers. To determine whether the majority of the designed load capacity is attributable to passenger-carrying capacity, multiply the designed seating capacity (including the driver's) by 68kg, which is the figure used for applying the Australian Design Rules. If the resulting total passenger weight exceeds the remaining 'load' capacity, the vehicle is treated as being designed for the principal purpose of carrying passengers and so is ineligible for the work-related use exemption.
A dual cab vehicle with a gross vehicle weight of 1,950kg, a basic kerb weight of 1,400kg, and a designed seating capacity of five would be considered a vehicle designed principally for carrying passengers. This is because the majority of the total load capacity (340kg (5 x 68kg) of a total of 550kg) would be absorbed by its designed passenger carrying capacity.
End of example
If a car is unregistered for the full FBT year and used principally for business purposes, any private use is exempt from FBT. A car that may be lawfully driven on a public road is regarded as being registered.
For an explanation of the types of motor vehicles that are cars, refer to section 7.1 of Car fringe benefits.