ATO Interpretative Decision

ATO ID 2012/97

Fringe Benefits Tax

Exempt car benefits: private use

CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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

Where an employee's duties of employment are inherently itinerant in nature, is the transporting of the employee's family member by the employee on their journey from home to a particular work location in their employer's car, which satisfies the requirements of paragraph 8(2)(a) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA), a 'private use' of the car for the purposes of paragraph 8(2)(b) of the FBTAA?

Decision

Yes. The transporting of the employee's family member is a 'private use' of the car for the purposes of paragraph 8(2)(b) of the FBTAA as the use of the car is not exclusively in the course of producing assessable income of the employee.

Facts

All statutory references are to the FBTAA.

The employee carries out their duties of employment at varying locations and varying times. Their duties of employment are inherently itinerant in nature.

The employer provides a panel van designed to carry a load of less than one tonne to the employee. The van satisfies the requirements of paragraph 8(2)(a).

The van is garaged by the employee at their home. Therefore, a car benefit arises under section 7.

On one occasion in the year of tax the employee transported their child to school in the van during the employee's journey from home to one of their work locations.

Reasons for Decision

Car benefits provided in relation to types of cars listed in paragraph 8(2)(a), such as panel vans designed to carry a load of less than one tonne, are exempt benefits if there is no private use other than excepted 'private use' for the purposes of paragraph 8(2)(b).

Paragraph 8(2)(b) requires that there was no private use of the car when the benefit was provided other than:

(i)
work-related travel of the employee (subparagraph 8(2)(b)(i)); and
(ii)
other private use by the employee or an associate of the employee, being other use that was minor, infrequent and irregular (subparagraph 8(2)(b)(ii)).

Subsection 136(1) states that:    


private use , in relation to a motor vehicle, in relation to an employee or an associate of an employee, means any use of the motor vehicle by the employee or associate, as the case may be, that is not exclusively in the course of producing assessable income of the employee.

Miscellaneous Taxation Ruling MT 2027 Fringe benefits tax: private use of cars: home to work travel (MT 2027) considers the distinction between business and private use of a car in circumstances where the car is being driven to or from the employee's home. Paragraph 25 of MT 2027 sets out that travel from an employee's home may constitute business travel where the nature of the employment is inherently itinerant.

As the employee's duties of employment are inherently itinerant in nature, their unaccompanied journey in the van from home to work would generally be considered business travel in accordance with an application of MT 2027.

However, the specific journey in this case involves the transporting of the employee's child to school during the employee's journey from home to one of their work locations. In these circumstances, the employee's journey is not business travel and it is a private use of the car because the journey was not made exclusively in the course of the employee producing their assessable income.

Therefore, the transporting of the employee's family member is a 'private use' of the car for the purposes of paragraph 8(2)(b). Accordingly, it cannot be said that there has been 'no private use of the car' as required by paragraph 8(2)(b).

NOTE : In order to determine whether the car benefit is an exempt benefit, there will need to be a consideration as to whether the private use of the car in this case falls into either of the categories of excepted private use under subparagraph 8(2)(b)(i) and subparagraph 8(2)(b)(ii).

Date of decision:  14 November 2012

Year of income:  Year ending 31 March 2013

Legislative References:
Fringe Benefits Tax Assessment Act 1986
   section 7
   paragraph 8(2)(a)
   paragraph 8(2)(b)
   subparagraph 8(2)(b)(i)
   subparagraph 8(2)(b)(ii)
   subsection 136(1)

Related Public Rulings (including Determinations)
Miscellaneous Taxation Ruling MT 2027

Related ATO Interpretative Decisions
ATO ID 2012/96
ATO ID 2012/98

Keywords
Fringe benefits tax
Exempt car benefits
Car fringe benefits
FBT exempt private use

Business Line:  Private Groups and High Wealth Individuals

Date of publication:  23 November 2012
Date reviewed:  22 January 2018

ISSN: 1445-2782