ATO Interpretative Decision

ATO ID 2012/98

Fringe Benefits Tax

Exempt car benefits: excepted private use

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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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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), an excepted 'private use' for the purposes of paragraph 8(2)(b) of the FBTAA?

Decision

Yes. The transporting of the employee's family member is an excepted 'private use' for the purposes of paragraph 8(2)(b) of the FBTAA as the use of the car for this purpose is minor, infrequent and irregular in accordance with subparagraph 8(2)(b)(ii) of the FBTAA.

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 employee's unaccompanied travel in the van from home to work would be considered business travel in accordance with an application of Miscellaneous Taxation Ruling MT 2027 Fringe benefits tax: private use of cars: home to work travel.

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.

The transporting of the employee's family member is a 'private use' of the car for the purposes of paragraph 8(2)(b). There was no other private use.

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 be 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)).

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

Subparagraph 8(2)(b)(i) - work-related travel

The term 'work-related travel' is defined in subsection 136(1) as follows:    


work-related travel , in relation to an employee, means:

(a)
travel by the employee between:

(i)
the place of residence of the employee; and
(ii)
the place of employment of the employee or any other place from which or at which the employee performs duties of his or her employment; or

(b)
travel by the employee that is incidental to travel in the course of performing the duties of his or her employment.

The words 'travel by the employee' in paragraph (a) of the definition of 'work-related travel' in subsection 136(1) make it clear that the paragraph only applies to the employee's travel between home and a work location. Similarly, the words 'travel by the employee' in paragraph (b) of the definition of 'work-related travel' in subsection 136(1) make it clear that the paragraph only applies to the employee's travel that is incidental to travel in the course of performing their employment duties.

Travel by someone other than the employee, such as travel by a member of the employee's family, is not the type of travel which falls into either paragraph (a) or (b) of the definition of 'work-related travel' in subsection 136(1). Therefore, the travel by the employee's child in this case does not meet the definition of 'work-related travel'.

Accordingly, the transportation of the employee's child to school by the employee on their way to a work location is not work-related travel for the purposes of subparagraph 8(2)(b)(i). In these circumstances, subparagraph 8(2)(b)(i) does not except the private use of the car by the employee.

Subparagraph 8(2)(b)(ii) - minor, infrequent and irregular private use

The FBTAA does not specify what is meant by the terms 'minor', 'infrequent' and 'irregular' in relation to private use and, therefore, each of those terms will take their ordinary meaning in the context in which they are used.

The Macquarie Dictionary 2009, rev. 5th edn, The Macquarie Library Pty Ltd, NSW provides the following definitions for each of the terms:    


minor
   

adjective
   

1. lesser, as in size, extent, or importance...
   

infrequent
   

adjective
   

1. happening or occurring at long intervals or not often...
   

2. not constant, habitual, or regular...
   

irregular
   

adjective
   

not characterised by any fixed principle, method, or rate: irregular intervals

For the purposes of subparagraph 8(2)(b)(ii) all three of the conditions must be satisfied.

The transportation of the employee's child to school during the employee's journey from home to a work location was a one-off occasion and there was no other private use of the car.

In these circumstances, the transporting of the employee's family member is an excepted 'private use' for the purposes of subparagraph 8(2)(b)(ii) as the use of the car for this purpose is minor, infrequent and irregular.

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 2012/97

Other References:
Macquarie Dictionary 2009, rev. 5th edn, The Macquarie Library Pty Ltd, NSW

Keywords
Fringe benefits tax
Exempt car benefits
Car fringe benefits
FBT exempt private use
FBT home to work travel

Siebel/TDMS Reference Number:  1-4D1Y6FC; 1-783U037; 1-DESS77X

Business Line:  Private Groups and High Wealth Individuals

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

ISSN: 1445-2782