Motor vehicles - residual benefits
Legislative reference: subsections 47(6)External Link and 47(6A)External Link of the FBTAA.
Where you provide an employee with the use of a motor vehicle that is not a car
This use is an exempt benefit if any private use is restricted to the following circumstances:
- travel to and from work
- use 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.
For an explanation of the types of motor vehicles that are cars, refer to section 7.1 of Car fringe benefits.
If the use of the vehicle exceeds the limits set out above, a residual benefit will arise and the taxable value can be worked out using either the cents-per-kilometre method or operating cost method (refer to section 18.6 of Residual fringe benefits).
All the private use of the vehicle, including travel between home and work, is taken into account in determining the business percentage under the operating cost method.
Where the motor vehicle is used wholly or principally in connection with your business operations and is at all times unregistered, any private use by the employee is also an exempt benefit. A motor vehicle that may be lawfully driven on a public road is regarded as being registered.