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  • Fringe benefits tax – exempt motor vehicles

    An employee's private use of a taxi or a panel van, utility (ute) or other commercial vehicle (that is, one not designed principally to carry passengers – see Table 1) is exempt from fringe benefits tax (FBT) if their private use is limited to:

    • 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).

    The exemption also applies to non-work-related use by an employee's associate that is minor, infrequent and irregular.

    The employer is not required to keep special records to be eligible for this exemption. However, you must be able to demonstrate the use of the vehicle meets the eligibility criteria at all times. This could be done by regularly comparing the opening and closing odometer readings of the vehicle with the total distance you expect the employee to travel between home and work during that particular period.

    Alternatively, you may need more detailed records of the vehicle's usage during the FBT year. This could be a valid log book, together with opening and closing odometer readings.

    See also:

    • Miscellaneous Taxation Ruling MT 2027 Fringe benefits tax: private use of cars: home to work travel – for more guidance on the private use of cars and home to work travel
    • Practical Compliance Guideline PCG 2018/3 Exempt car benefits and exempt residual benefits: compliance approach to determining private use of vehicles for more guidance on what is considered minor, infrequent usage and what records need to be kept

    On this page:

    Eligible vehicles

    Table 1 below sets out the eligibility requirements for the FBT exemption for different types of vehicles.

    Table 1: Eligible vehicles – requirements for exemption

    Vehicle type

    Requirements

    More information

    Taxi

    Taxis qualify for the work-related use exemption if they are owned or leased and designed to carry a load of less than one tonne and fewer than nine passengers.

    See subsection 8(2) and 47(6) Fringe Benefits Tax Assessment Act 1986.

    Panel van – solid rigid-bodied, non-articulated car, smaller than a truck, without rear side windows

    Panel vans qualify for the work-related use exemption.

    See subsection 8(2) and 47(6) Fringe Benefits Tax Assessment Act 1986.

    Single cab ute

    Single cab utility trucks qualify for the exemption.

    See subsection 8(2) and 47(6) Fringe Benefits Tax Assessment Act 1986.

    Dual cab ute – different from conventional goods vehicles with extra seats behind the driver and front passenger. They also share a common chassis which can fit a single or dual passenger cab and alternate tray section

    Dual cabs qualify for the work-related use exemption only if they are not designed for the principal purpose of carrying passengers.

    For an explanation on how to work out if a dual cab is eligible for the exemption, refer to MT 2024 Fringe benefits tax: dual cab vehicles eligibility for exemption where private use is limited to certain work-related travel.

    Four-wheel drive vehicle (other than utilities and dual cabs)

    Four-wheel drive vehicles qualify for the work-related use exemption if they are:

    • designed to carry a load of one tonne or more, or
    • designed to carry more than eight passengers, or
    • not designed for the principal purpose of carrying passengers. 
     

    See TD 94/19 for examples of factors to consider when deciding whether a four-wheel drive vehicle (other than a utility or dual cab) is designed for the principal purpose of carrying passengers. These factors include:

    • the appearance and presentation of the vehicle
    • any relevant promotional literature
    • the emphasis evident in marketing
    • the vehicle's specification
    • load carrying capacity
    • passenger carrying capacity. 
     

    Modified vehicle

    Modified vehicles qualify for the work-related use exemption if, for the entire FBT year when the car is provided, a modification or alteration permanently affects the inherent design of the vehicle (for example, hearses). 

    See MT 2033 Fringe benefits tax: application of sub-section 8(2) exemption to modified cars.

    Other road vehicle

    Other road vehicles qualify for the work-related used exemption if they are designed to carry:

    • a load of one tonne or more, or
    • more than eight passengers. 
     

    See subsection 8(2) and 47(6) Fringe Benefits Tax Assessment Act 1986.

    Load carrying capacity calculation

    You can use the following formula to calculate the carrying capacity of a vehicle:

    Maximum loaded vehicle weight (for example, gross vehicle weight – typically shown on the compliance plate attached to a vehicle's engine bay, door pillar or footwell by the manufacturer or importer).

    Less:

    Unladen vehicle weight (for example, basic kerb weight) – this 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. It does not include the weight of goods or occupants.

    FBT treatment when exemption requirements not met

    When the usage requirements for this exemption are not met, the employee's use of the car is a fringe benefit as outlined in Table 2.

    Table 2: FBT treatment when usage requirements for this exemption are not met

    If:

    Then:

    • the vehicle is a car
    • your employee's use of the car exceeds what is considered minor, infrequent and irregular, and
    • you elect to use the operating cost method

     

    your employee's use of the car is a car fringe benefit and all of the private use of the car, including travel between home and work, is taken into account in determining the business percentage.

    Note: If no log book records are maintained, the percentage of private use will be 100%.

    • the vehicle is a car
    • your employee's use of the car exceeds what is considered minor, infrequent and irregular, and
    • you use the statutory formula method

     

    your employee's use of the car is a car fringe benefit and all of the private use of the car, including travel between home and work, is taken into account in working out when the car was used or available for the private use of the employee.

    • the motor vehicle is not a car, and
    • your employee's use of the vehicle exceeds what is considered minor, infrequent and irregular.

     

    your employee's use of the vehicle is a residual fringe benefit.

    Note: The operating cost method may be used for valuing the benefit. Alternatively, if there is extensive business use the cents per kilometre method may be used to value the benefit.

    Last modified: 29 Mar 2019QC 58429