Personal services entities
Legislative reference: subsection 8(4)External Link of the FBTAA.
A car benefit is an exempt benefit in relation to an FBT year if the person providing the benefit can't deduct an amount under the Income Tax Assessment Act 1997 (ITAA 1997) for providing the benefit because of section 86-60 of that Act.
Section 86-60 of the ITAA 1997 limits the extent to which a personal services entity can deduct car expenses. Deductions are not allowed for more than one car for private use.
The use of these cars is an exempt benefit because the entity is not entitled to claim an income tax deduction for these cars.