ATO Interpretative Decision
ATO ID 2003/613 (Withdrawn)
Fringe Benefits Tax
Car fringe benefits: car taken to be available for private use under the statutory formula methodFOI status: may be released
-
This ATO ID is withdrawn as it is a straightforward application of the law and does not contain an interpretative decision.This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Is there any discretion available to the Commissioner under section 7 of the Fringe Benefits Tax Assessment Act 1986 (FBTAA), to determine that a car is not available for the private use of an employee when the car is garaged or kept at or near the employee's place of residence?
Decision
No. There is no discretion within Section 7 of the FBTAA that allows the Commissioner to treat the car as not being available for private use.
Facts
The employer, who is not an ambulance service, a firefighting service or a police service, holds a range of sedans which are all 'cars' in terms of the FBTAA.
For a period of time, the employer is unable to use its office building and is therefore required to move its business temporarily to another building at another location.
This temporary building has no secure garaging or parking facilities, and there are no secure parking facilities available within the area. In that respect, the cars would have to be parked either in the street or open car parks.
In order to protect the cars from theft or vandalism various employees were allocated cars to travel to and from work, on the condition that they are kept securely garaged overnight and on weekends at the employees' residence/home.
The employer uses the statutory formula method for calculating the taxable value of car fringe benefits.
Reasons for Decision
Under subparagraph 7(1)(a)(ii) of the FBTAA, a car benefit will arise when a car that is held by an employer is taken to be available for the private use of an employee or an associate of the employee. The availability is taken to constitute a benefit provided to the employee or associate in respect of the employee's employment.
Subsection 7(2) of the FBTAA provides that a car shall be 'taken to be available' for the private use of an employee or an associate of the employee where it is 'garaged or kept at or near a place of residence of the employee or an associate of the employee'.
Subsection 7(3) of the FBTAA provides that a car shall be 'taken to be available' for private use of an employee or an associate where the car is held by the employer or an associate and the car is not at the business premises of the employer and any of the following conditions is satisfied; either:
- •
- the employee is entitled to apply the car for private use, or
- •
- the employee is not performing the duties of his or her employment and has custody or control of the car, or
- •
- an associate of the employee is entitled to use, or has custody or control of, the car.
The two situations, therefore, in which a car will be taken to be available for private use of an employee or an associate and a car benefit will arise are:
- •
- where the car is garaged at or near the employee's residence (subsection 7(2)): or
- •
- where the car is not at the employer's business premises and the employee has the use, custody or control of the car (subsection 7(3)).
The effect of subsection 7(4), is for the purposes of subsection 7(3), a car that is garaged at an employees home is treated as being available for the private use of the employee regardless, of whether or not the employee has permission to use it.
Where the statutory formula method of calculating car fringe benefits is used, subsection 7(2) treats the place of garaging as a determining factor in calculating the taxable value of the car fringe benefit. Where the car is garaged at or near the place of residence of the employee, there is no discretion available to the Commissioner to treat the car as not available for private use, even where it is due to extenuating circumstances.
As the car is not used by an ambulance service, a firefighting service or a police service, the exemption under subsection 7(2A) does not come into effect.
Year of income: Year ended 31 March 2003
Legislative References:
Fringe Benefits Tax Assessment Act 1986
section 7
paragraph 7(1)(a)
subsection 7(2A)
subsection 7(2)
subsection 7(3)
subsection 7(4)
Keywords
Car fringe benefits
FBT car
FBT Statutory formula
Fringe benefits
Fringe benefits tax
ISSN: 1445-2782
| Date: | Version: | |
| 17 June 2003 | Original statement | |
| You are here | 1 April 2016 | Archived |