Could your employee's personal trips cost you FBT?

Watch: FBT obligations

Offering non-cash perks on top of your employee’s regular wage or salary, is a common way for employers to attract, reward and keep staff.

A common perk offered by employers is personal use of work vehicles. Yet, this may be a ‘fringe benefit’ and could result in a fringe benefits tax (FBT) liability for your business.

FBT generally applies when a work vehicle is made available for private use – even if it’s not actually used. Private use includes any travel not directly related to your employee’s job, such as:

• taking the vehicle on beach or camping trips
• school drop-offs and pick-ups (even if it’s on the way to or from work)
• running personal errands (like picking up the groceries)
• transporting friends or family for non-work-related purposes
• parking the vehicle at your employee’s home (even if it’s only for security reasons).

Exemptions may apply depending on the vehicle’s specifications and the nature of the private use.

Understanding how your work vehicles are being used and whether any exemptions apply will help you determine if FBT applies to your situation.

What you need to do

1. Check if exemptions apply – some vehicles may be exempt from FBT if the employee's private use is limited.
2. Keep accurate records – the records you need to keep depend on which method you use to calculate the taxable value but may include logbooks and odometer readings. Even if the benefit is exempt from FBT because of limited private use, you need to keep records to support this.
3. Work out the taxable value and calculate your FBT liability – use our FBT car calculator to help you do this.
4. Lodge and pay your FBT return – by 21 May or 25 June, if you use a registered tax agent.
5. Report the reportable fringe benefits amount – on each of your employee’s income statement or payment summary.

Staying on top of your FBT obligations will help you stay compliant and avoid unwanted consequences.

For more information and resources, visit How FBT applies to cars or talk to your registered tax agent.

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