• 7.6 Exempt car benefits

    There are circumstances in which private use of a car by a current employee may be exempt from FBT.

    An employee's private use of either:

    • a taxi, panel van or a utility designed to carry less than one tonne
    • any other road vehicle designed to carry a load of less than one tonne (that is, a vehicle not designed principally to carry passengers) is exempt if the employee's private use of such a vehicle is limited to
      • travel between home and work
      • travel incidental to travel in the course of performing employment-related duties, and
      • non-work-related use that is minor, infrequent and irregular (for example, occasional use of the vehicle to remove domestic rubbish).
       
    Attention

    Where the vehicle is designed to carry one tonne or more, you may be eligible for an exemption under the motor vehicles - residual fringe benefits exemption.

    End of attention

    Example: Exempt use

    An electrical company employee takes the company van (carrying capacity of less than one tonne) home each night as 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, a residual benefit arises - for more information, 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.

      Last modified: 08 May 2012QC 17818