There is no fringe benefits tax (FBT) when an employee uses your vehicle if:
There is a separate exemption for eligible electric cars.
The following vehicles are eligible for the limited private use exemption:
- a single cab ute
- a dual cab ute that is designed to either
- carry a load of 1 tonne or more
- carry more than 8 passengers (including the driver)
- carry a load of less than 1 tonne but is not designed for the principal purpose of carrying passengers. To work out if a dual cab ute meets this condition, see MT 2024 Fringe benefits tax: dual cab vehicles eligibility for exemption where private use is limited to certain work-related travel on our legal database
- a panel van or goods van
- a modified vehicle (such as a hearse) if, for the entire FBT year when the car is used by the employee, the modification permanently affects the inherent design of the vehicle. To find out what constitutes a modified vehicle, see MT 2033 Fringe benefits tax: application of sub-section 8(2) exemption to modified cars
- a taxi
- any 4-wheel drive vehicle that is designed either
- any other road vehicle that is designed to carry either
- a load of 1 tonne or more
- more than 8 passengers (including the driver).
If the vehicle your employee is using is:
- an eligible vehicle, check that their use is limited to uses that qualify for the FBT exemption
- a car that is not an eligible vehicle, FBT applies to the employee's private use of it. You calculate the taxable value of this use as a car fringe benefit.
To determine if a vehicle is eligible, you may need to know if it is designed to carry a load of 1 tonne or more.
You can use the following formula to calculate the carrying capacity of a vehicle:
Maximum loaded vehicle weight (or gross vehicle weight, which is typically shown on the compliance plate attached to a vehicle's engine bay, door pillar or footwell by the manufacturer or importer).
Unladen vehicle weight (or basic kerb weight, which is the weight of the vehicle with a full capacity of lubricant, coolant and fuel together with spare wheel, tools (including jack) and installed options, but excluding the weight of goods or occupants).
FBT does not apply if your employee only uses your eligible vehicle for the following:
- travel between home and work
- travel that is incidental to travel in the course of employment duties
- non-work-related use that is minor, infrequent and irregular (such as occasional use of the vehicle to remove domestic rubbish).
If FBT does not apply to your employee's use of your eligible vehicle, then it also does not apply to:
- any road or bridge tolls you incur while your employee is using the vehicle
- use of the vehicle by your employee's associate (such as their partner), provided their use is also minor, infrequent and irregular.
To check what we consider minor, infrequent and irregular use, see PCG 2018/3 Exempt car benefits and exempt residual benefits: compliance approach to determining private use of vehicles on our legal database.
You don't have to keep special records to be eligible for the exemption. However, you must be able to demonstrate that the use of the vehicle at all times meets the limited private use conditions.
For example, you could regularly compare the opening and closing odometer readings of the vehicle with the total distance you expect the employee to travel between home and work.
If an employee's use of your eligible vehicle doesn't meet the conditions for limited private use, it is a car fringe benefit or residual fringe benefit.
You need to:
- work out the taxable value of the private use of the eligible vehicle
- calculate how much FBT to pay
- lodge your FBT return
- pay the FBT amount
- check if you should report the fringe benefit through Single Touch Payroll (or on your employee’s payment summary).
Claiming tax deductions
You can claim a deduction for expenses for motor vehicles used in running your business. If you pay FBT, the:
- FBT you pay is tax deductible
- private use expenses of the vehicle that you pay FBT on is tax deductible.