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Edited version of your written advice
Authorisation Number: 1012848575353
Date of advice: 28 July 2015
Ruling
Subject: Fringe benefits tax
Question 1
Does a fringe benefit arise if vehicles are garaged overnight at an employee's home address where that address is recognised as a base of operations?
Answer
Yes
This ruling applies for the following period:
Year ended 31 March 2015
The scheme commences on:
1 April 2014
Relevant facts and circumstances
Employee 1 works full time for you and exclusively from home. Employee 1 has a home office agreement in place which provides for an office allowance and describes the expectations associated with working from home.
Employee 1 is declaring the home office allowance as income and offsetting this with an appropriate deduction. The home office is located at the front of the house and has a separate entrance.
You recognise this location as a base of business operations, a workplace Occupational Health and Safety (OHS) audit is conducted every year and the office has been used as a location to conduct business meetings.
Employee 2 works full time, three days a week from home and two days a week from head office. Employee 2 has a home office agreement in place which provides for an allowance and describes the expectations associated with working from home.
Employee 2 is declaring the home office allowance as income and offsetting this with an appropriate deduction. The home office is located at the back of the house and does not have a separate entrance.
You recognise this location as a base of business operations, a workplace OHS audit is conducted every year and the office has been used to conduct business meetings.
On occasion these employees pick up a company pool car from another office and garage it overnight at their home so they can attend a meeting the next morning. You have declared the overnight garaging as private and a FBT liability raised and paid.
Relevant legislative provisions
Fringe Benefits Tax Assessment Act 1986, section 7.
Reasons for decision
While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision.
Summary
There will be a fringe benefit whenever a car is garaged overnight at an employee's home address regardless of whether that address is recognised as a base of operations.
Detailed reasoning
Under subparagraph 7(1)(a)(ii) of the Fringe Benefits Tax Assessment Act 1986 (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:
• 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) of the FBTAA is that for the purposes of subsection 7(3), a car that is garaged at an employee's 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.
Therefore a car fringe benefit will arise when your employees take a pool car home and garage it overnight.
Additional information
Where the statutory formula method of calculating car fringe benefits is used, subsection 7(2) of the FBTAA treats the place of garaging as a determining factor in calculating the taxable value of the car fringe benefit.
The operating cost method under subsection 10(2) of the FBTAA makes provision for a reduction in the taxable value of the car fringe benefit in relation to a car where there has been business use of the car.
The operating cost method under subsection 10(2) of the FBTAA makes provision for a reduction in the taxable value of the car fringe benefit in relation to a car where there has been business use of the car.
Certain requirements must be met in order to ascertain the percentage of business use of a particular car and substantiate that percentage of business use. These include keeping logbook records and odometer records.
Because logbook records are normally maintained for only 12 weeks, care should be taken in estimating the percentage of business use of the car. The estimate must take into account the information in the logbook records and the odometer records, as well as any variations in the pattern of business use throughout the year.
ATO Interpretative Decision ATO ID 2002/102 addresses the question of whether an employer could request an amendment to a FBT return that had been lodged to change the method used to value a car fringe benefit from the statutory formula method to the operating cost method.
The facts in ATO ID 2002/102 were that the employer found a misplaced log book. The employer requested an amendment after finding that the taxable value of the car fringe benefit using the operating cost method was lower than the taxable value using the statutory formula method.
The request to amend was allowed as it was 'considered appropriate in the specific circumstances of the employer for the Commissioner to extend the declaration date to accept a late election by the employer to allow the operating cost method of valuing the car fringe benefit'.
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