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This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

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Edited version of your written advice

Authorisation Number: 1051359126312

Date of advice: 11 April 2018

Ruling

Subject: Fringe Benefits Tax – Car Benefits

Question 1

Is the use of a car owned by the Company by its employees a car benefit under subsection 7(1) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)?

Answer

Yes

Question 2

Are the fringe benefits provided to employees, being the private use of a car held by the Company during the year of tax, excluded fringe benefits as prescribed by regulation 8 of the Fringe Benefits Tax Regulations 1992 (FBTR)?

Answer

Yes

This ruling applies for the following period(s)

Year ended 31 March 2018

The scheme commences on

1 April 2017

Relevant facts and circumstances

The Company distributes electronic car accessories in Australia, this includes, but is not limited to; AV head units, CD Players, car speakers, and sub woofers.

The Company provides a pooled vehicle to a limited number of staff for work related usage. The vehicle is an SUV. The vehicle is mostly garaged overnight at the Company head office.

The vehicle is used by staff to visit alternate work sites. Staff may drive the vehicle home after working at an alternate work site where the car will be garaged for the night and returned to the head office the following business day, this may include over the weekend.

Additionally, staff may drive the vehicle home from the head office and garage it at home overnight, if they are expected to work at an alternate worksite early the following morning, this may include over the weekend.

After market product is often installed into the vehicle for testing. In order to test the installed product, staff will drive the vehicle home, garage the vehicle at their home and return it to head office the following business day. The outcome of testing is used to enhance distribution efforts and provide feedback to the parent company.

A detailed log book is maintained to itemise each trip.

Relevant legislative provisions

section 5E of the Fringe Benefits Tax Assessment Act 1986

subsection 7(1) of the Fringe Benefits Tax Assessment Act 1986

subsection 7(2) of the Fringe Benefits Tax Assessment Act 1986

subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986

Part XIB of the Fringe Benefits Tax Assessment Act 1986

regulation 8 of the Fringe Benefits Tax Regulations 1992

subsection 995-1(1) of the Income Tax Assessment Act 1997

Reasons for decision

Question 1

Summary

The use of a car owned by the Company by its employees is a car benefit under subsection 7(1) of the FBTAA.

Detailed reasoning

Under subsection 7(1) of the FBTAA, a car benefit will arise at any time on a day in respect of the employment of an employee where a car is held by the employer and is applied to a private use by the employee or is taken to be available for the private use of the employee.

Subsection 136(1) of the FBTAA and subsection 995-1(1) of the Income Tax Assessment Act 1997 provides:

car means a *motor vehicle (except a motor cycle or similar vehicle) designed to carry a load of less than 1 tonne and fewer than 9 passengers.

A car is taken to be available for the private use of an employee on any day that they or their associates:

If a car is garaged at or near your employee's home, even if only for security reasons, it is taken to be available for their private use regardless of whether or not they have permission to use the car privately under subsection 7(2) of the FBTAA.

Generally, travel to and from work is private use of a vehicle as detailed in Taxation Ruling IT 112 and established in the decision in Lunney v FCT (1958) 100 CLR.

Application to your circumstances

An SUV is a vehicle designed to carry a load of less than 1 tonne and fewer than 9 passengers, therefore it is considered to be a car within the definition of subsection 136(1) of the FBTAA.

The vehicle is owned by the Company, who makes the car available for use by its employees.

On the occasions that the vehicle is garaged at the home of the employee the vehicle is considered to be available for private use regardless of whether the employee has permission to do so. In addition, the use of the car by the Company employees to drive between home and that day’s work site is considered to be private use. As a result, it is considered to be a car benefit.

Question 2

Summary

The fringe benefits provided to employees, being the private use of a car held by the Company during the year of tax, are excluded fringe benefits as prescribed by regulation 8 of the Fringe Benefits Tax Regulations 1992 (FBTR).

Detailed reasoning

Section 5E of the FBTAA determines the employee's individual fringe benefits amount. Excluded from the individual fringe benefits amount are excluded fringe benefits. Benefits which are prescribed for the purposes of paragraph 5E(3)(i) of the FBTAA are excluded fringe benefits.

Regulation 8 of the FBTR prescribes benefits relating to pooled or shared cars as being excluded fringe benefits for the purposes of paragraph 5E(3)(i) of the FBTAA.

Fringe benefits which are excluded fringe benefits would also not be included in the employee's reportable fringe benefits amount under Part XIB of the FBTAA.

In general terms, the exclusion prescribed by regulation 8 of the FBTR for pooled or shared cars is available from 1 April 2007 where a car held by an employer is used by more than one employee during the year of tax, where each employee is provided with:

Where such a pooled or shared use exists during the year of tax the benefits are excluded fringe benefits for both employees.

Regulation 8 of the FBTR provides:

8(1) For paragraph 5E(3)(i) of the Act, a car benefit is prescribed if:

(a) the benefit:

(b) the car to which the benefit relates is applied to or available for the private use of more than one employee under subsection 7(1) of the Act.

Application to your circumstances

The Company is providing a benefit to the employees using the vehicle, which is a car fringe benefit. That car is available for the private use of more than one employee. As a result, it is a pooled or shared car and is an excluded fringe benefit.

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