Edited version of private ruling

Authorisation Number: 1011580409346

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Ruling

Subject: Provision of Motor Vehicle-Exempt Residual Benefit.

1. Is there a residual benefit pursuant to section 45 of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) when an employee uses a ten tonne truck, a grader or a roller for travel to and from home and the work site?

Yes.

2. Is the residual benefit an exempt residual benefit pursuant to subsection 47(6) of the FBTAA?

Yes.

This ruling applies for the following period:

1 April 2010 to 31 March 2014

Relevant facts and circumstances

This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.

You are a city council. Your council covers a large geographical area encompassing small towns and villages. Many of your employees reside and work in or near these towns or villages.

Road and bridge works are carried on Councils' infrastructure. This work may involve using large trucks, rollers and graders. Because of the locality of worksites and distance to the Council's depot from sites, equipment is often left at the worksites overnight.

Occasionally, a Council employee who resides within 5 to 20 kilometres of a work site will be requested to take one of the large items (a ten tonne truck, roller or grader) home for security reasons. They would then return the vehicle to the work site the next day.

This would only occur very occasionally, once or twice a year. The employee could take it home every day for only a couple of days or weeks.

The applicant has stated that this scenario was not always practical and would only occur on the rare occasion where the employee lived within a reasonable proximity of the worksite. Private usage would be limited to between home and worksites.

Relevant legislative provisions

Fringe Benefits Tax Assessment Act 1986 Section 45

Fringe Benefits Tax Assessment Act 1986 Subsection 47(6)

Fringe Benefits Tax Assessment Act 1986 Subsection 136(1)

Income Tax Assessment Act 1997 Section 995-1

Reasons for decision

These reasons for decision accompany the Notice of private ruling. While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision.

Subsection 47(6) of the FBTAA states:

Where:

a residual benefit consisting of the provision or use of a motor vehicle is provided in a year of tax in respect of the employment of a current employee;

(aa) the motor vehicle is not:

(i) a taxi let on hire to the provider; or

(ii) a car, not being:

(A) a panel van or utility truck; or

(B) any other road vehicle designed to carry a load of less than one

tonne (other than a vehicle designed for the principal purpose of carrying passengers); and

(b) there was no private use of the motor vehicle during the year of tax and at a time the benefit was provided other than:

(i) work-related travel of the employee; and

(ii) other private use of the motor vehicle by the employee or an associate of the employee, being other use that was minor, infrequent and irregular;

the benefit is an exempt benefit in relation to the year of tax.

Therefore, an exemption is available under subsection 47(6) of the FBTAA where all of the following conditions are met:

A residual benefit consisting of the provision of a motor vehicle is provided in respect of the employment of a current employee;

The vehicle is not one of the excluded types;

The only private use of the vehicle is either:

(i) work-related travel by the employee; or

(ii) any other private use by the employee (or associate) was minor or infrequent and irregular.

(a) Is the residual benefit provided in respect of the employment of a current employee.

Section 45 of the FBTAA states that a residual benefit is one that is not a benefit by virtue of any provision of Subdivision A of Division 2 to 11 inclusive of the FBTAA. Therefore, a residual benefit is a benefit that does not fall within one or more specific benefit types contained in the FBTAA.

The vehicles that will be provided occasionally to employees will be a ten tonne truck, a grader and a road roller. These vehicles clearly do not satisfy the definition of a car under section 995-1 of the Income Tax Assessment Act 1997 (ITAA 1997). The vehicles listed are not passenger vehicles.

It is considered that none of Divisions 2 to 11 inclusive of the FBTAA has any application to these types of vehicles. The benefit is provided to employees in respect of their employment. The provision of these vehicles to the employees will give rise to residual benefits under section 45 of the FBTAA.

(b) The vehicle is not one of the excluded vehicles.

The vehicles described in your ruling request being a ten tonne truck, a grader and a roller are not one of the excluded types of vehicle in paragraph 47(6)(aa) of the FBTAA.

(c) Does the private use of the vehicles from home to work qualify as work related travel for the purposes of subsection 47(6) of the FBTAA?

Under subsection 47(6), a residual benefit in relation to the use of the ten tonne truck, grader or roller, is considered to be an exempt benefit where there is no private use of the vehicle by the employee or where the private use is limited to certain work-related travel and other private use that was minor, infrequent and irregular.

Section 136(1) of the FBTAA defines "work related travel" as follows:

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

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

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

This view is confirmed at paragraph 8 of Miscellaneous Taxation Ruling MT 2034, Fringe benefits tax: private use of motor vehicles other than cars.

You have stated that your employee's use of the vehicles will be only for travel between home and work and vice-versa. Therefore, the travel of your employee's in the ten-tonne truck, grader and roller will be considered as work-related travel.

(d) Other private use by the employee (or associate) was minor or infrequent and irregular.

You have stated that no other private use of the vehicles will be made by employees. This condition is satisfied.

Conclusion.

The private use of the ten-tonne truck, grader and roller by employees will give rise to a residual benefit under section 45 of the FBTAA. This benefit will qualify as an exempt residual benefit under subsection 47(6) of the FBTAA.

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