Edited version of private ruling

Authorisation Number: 1011762665111

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Subject : Whether vehicles fall within definition of a car

Question 1

Whether any of the following types of vehicles used by the employer fall within the definition of a 'car' under subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)?

· Mercedes-vito panel vans

· Mercedes-sprinter vans

· Toyota Hi-Ace vans

· Hyundai iLoad vans

· Toyota Hi-Ace commuter buses

· Toyota Coasters

· Iveco vans

Answer: No

Question 2

Whether use of all of the vehicles listed in Question 1 for home to work travel by an employee member of a specialist technical group of the employer necessitated by that employee being on-call is an exempt benefit under subsection 47(6) of the FBTAA?

Answer: Yes

Question 3

Whether the use of a Toyota Hilux 4x4 petrol dual cab auto for home to work travel by an employee member of a specialist technical group of the employer necessitated by that employee being on-call is an exempt benefit under section 8 of the FBTAA?

Answer

No, but such use will be an exempt benefit under subsection 47(6) of the FBTAA

Question 4

If any of the types of vehicles listed below and used by the employer do not satisfy the definition of 'car', as defined in subsection 136(1) of the FBTAA, whether subsection 39A(1) of the FBTAA regarding car parking benefits is applicable to any such vehicles?

· Mercedes-vito panel vans

· Mercedes-sprinter vans

· Toyota Hi-Ace vans

· Hyundai iLoad vans

· Toyota Hi-Ace commuter buses

· Toyota Coasters

· Toyota Hilux 4x4 v6 petrol dual cab auto

Answer: No

Issue 2:

Question 1

Whether the provision of designated car parking spaces, located at the employer's premises, in respect of any or all of the types of vehicles listed below are exempt residual benefits under paragraph 58G(1)(b) of the FBTAA?

· Mercedes-vito panel vans

· Mercedes-sprinter vans

· Toyota Hi-Ace vans

· Hyundai iLoad vans

· Toyota Hi-Ace commuter buses

· Toyota Coasters

· Toyota Hilux 4x4 v6 petrol dual cab auto

Answer: Yes

This ruling applies for the following period

1 April 20011 to 31 March 2012

1 April 20012 to 31 March 2013

1 April 20013 to 31 March 2014

1 April 20014 to 31 March 2015

1 April 20015 to 31 March 2016

The scheme commenced on

1 April 2011

Relevant facts

The employer has a policy (car policy) that employees can use employer cars or vehicles only for the following journeys:

1. home and work travel for on-call purposes;

2. work premises and work site travel; or

3. work site to work site travel for work-related purposes.

Associates of the employees cannot use employer cars or vehicles under the terms of the car policy.

Any other private use by employees adhering to the car policy will be minor, infrequent and irregular.

The employer uses the following vehicles:

· Mercedes-vito panel vans each with a designed carrying capacity of more than 1000 kg.

· Mercedes-sprinter vans each with a designed carrying capacity of 2000 kg.

· Toyota Hi-Ace vans each with a designed carrying capacity of more than 1000 kg.

· Hyundai iLoad vans each with a designed carrying capacity of more than 1000 kg.

· Toyota Hi-Ace commuter buses each designed with a carrying capacity of more than 10 passengers.

· Toyota Coasters each designed with a carrying capacity of more than 15 persons.

The above vehicles are mainly used by specialist technical groups of the employer and can be used to carry technical equipment.

The above vehicles may sometimes be used by members of the specialist technical groups of the employer for travel between home and work for on-call purposes.

The employer also uses Iveco vans each with a designed payload of more than 1000 kg.

The Iveco vans are used by the specialist technical groups of the employer.

The Iveco vans can be used to carry technical equipment.

Further, the employer uses Toyota Hilux 4x4 v6 petrol dual cab autos.

The Toyota Hiluxes are also used by are used by the specialist technical groups of the employer.

The following vehicles are provided with designated car parking spaces located at the various premises of the employer

· Mercedes-vito panel vans

· Mercedes-sprinter vans

· Toyota Hi-Ace vans

· Hyundai iLoad vans

· Toyota Hi-Ace commuter buses

· Toyota Coasters

· Iveco vans

· Toyota Hilux 4x4 v6 petrol dual cab autos

Each of the above employer premises are within 1 kilometre of a commercial car parking station charging more than $8 for all-day parking.

Relevant legislative provisions

Fringe benefits Tax Assessment Act 1986 section 8

Fringe benefits Tax Assessment Act 1986 subsection 8(2)

Fringe benefits Tax Assessment Act 1986 section 39A

Fringe benefits Tax Assessment Act 1986 subsection 39A(1)

Fringe benefits Tax Assessment Act 1986 section 45

Fringe benefits Tax Assessment Act 1986 subsection 47(6)

Fringe benefits Tax Assessment Act 1986 paragraph 58G(1)(b)

Fringe benefits Tax Assessment Act 1986 subsection 136(1)

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

Detailed Reasoning

Issue 1:

Question 1

1. The term 'car' is defined in subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) as follows:

car has the meaning given by subsection 995-1(1) of the Income Tax Assessment Act 1997.

2. Subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997), in turn, defines the term 'car' as follows:

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.

3. Additionally, the term 'motor vehicle' is defined in subsection 995-1(1) of the ITAA 1997 as follows:

motor vehicle means any motor-powered road vehicle (including a 4 wheel drive vehicle).

4. The relevant vehicles in this particular case are:

· Mercedes 'Vito' panel van

· Mercedes 'Sprinter' panel van

· Toyota 'Hi-Ace Commuter Bus'

· Toyota 'Coaster 'bus

· Hyundai 'iLoad' van

· Iveco '35S14' van

5. Per the guidance provided by Miscellaneous Taxation Ruling MT 2024, Fringe benefits tax: dual cab vehicles eligibility for exemption where private use is limited to certain work-related travel, it is accepted that each of the vehicles listed immediately above is not a 'car', as defined, for the purposes of the FBTAA.

Question 2

1. Subsection 47(6) of the FBTAA deals with exempt benefits in respect of the use of certain motor vehicles and states:

47(6) [Motor vehicle not for private use]

Where:

(a) 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 1 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 when 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.

2. Therefore, exemption under subsection 47(6) of the FBTAA requires that the following conditions be met:

(a) a residual benefit arises due to the provision or use of a motor vehicle, in the relevant year, in respect of the employment of a current employee; and

(b) the motor vehicle is not one of the vehicle types excluded by paragraph 47(6)(aa) of that subsection; and

(c) there was no private use of the relevant motor vehicle other than for the purposes listed in 47(6)(b) of that subsection.

(a) residual benefit

3. 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 Divisions 2 to 11 inclusive of the FBTAA. Therefore, in basic terms, a residual benefit is a benefit that does not fall within one of the other more specific benefit types contained in the FBTAA.

4. Miscellaneous Taxation Ruling MT 2034, Fringe benefits tax: private use of motor vehicles other than cars, states:

6. The right to use an employer's motor vehicle other than a car constitutes a residual benefit under section 45 of the [FBTAA]. Section 45, which forms part of Division 12 of Part III of the Act, applies to all benefits that are not subject to the specific rules incorporated in the preceding Divisions. For these purposes, benefit is defined widely in sub-section 136(1) of the [FBTAA] to include any privilege, service or facility and any right in relation to real or personal property. As such, it would include the right to use a motor vehicle.

7. Further, when the term benefit is read in conjunction with sub-section 148(1) [of the FBTAA], a benefit will exist for the purposes of section 45 whether or not the use of the vehicle is in connection with employment duties...

5. The provision or use of the motor vehicles listed in Question 1 are, therefore, residual benefits as each of such motor vehicles has been determined above as not to being a 'car', as that term is defined for the purposes of the FBTAA, and also due to the fact that it is considered, in the particular circumstances of this case, that no other specific provision of Subdivision A of Divisions 2 to 11 inclusive of the FBTAA apply.

6. This condition is, therefore, satisfied.

(b) not excluded vehicle

7. As the each of the motor vehicles listed in Question 1 is neither a taxi let on hire nor, indeed, a 'car' (of any type or description), as defined for the purposes of the FBTAA, then this condition is also satisfied.

(c) no private use other than for listed purposes

8. The expression 'private use' is defined in subsection 136(1) of the FBTAA as follows:

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.

9. The expression 'work-related travel' is also defined in subsection 136(1) of the FBTAA 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.

10. MT 2034 also provides the following guidance:

8. A significant exemption from FBT is, however, provided under sub-section 47(6) of the Act. Under this sub-section, no liability for FBT will arise in respect of the provision of a vehicle to an employee where there is no private use of the vehicle by the employee or where private use of the vehicle by the employee during a year of tax is limited to certain work-related travel. Work related travel is defined in sub-section 136(1) of the Act. It should be noted that in the event that private use is not so limited, FBT liability extends to all private use, including private home to work travel.

11. MT 2024 also provides the following guidance:

Preamble

Generally speaking, a liability for FBT arises where an employer's motor vehicle is used by an employee for private purposes or is available for the private use of an employee. However, under sub-sections 8(2) and 47(6) of the Fringe Benefits Tax Assessment Act ("the Act"), a liability for FBT will not arise where the private use of certain vehicles by employees during a particular year of tax is limited to certain work-related travel and non-work- related use that is minor, infrequent and irregular. This would include the occasional use of the vehicle to remove domestic rubbish. (Note for the purpose of this Ruling work-related use includes work- related travel and private use that is minor, infrequent and irregular). Work-related travel is defined in sub-section 136(1) of the Act to be travel between the employee's residence and place of employment or other place at which employment duties are performed and any travel that is incidental to travel in the course of performing duties of employment.

2. ...

3. Vehicles that may qualify for the work related use exemption under subsection 47(6) are those that are not classified as a car (as defined in subsection 136(1)) for the purposes of Division 2 of Part III of the Act, that is, vehicles other than those which are designed to carry a load of less than one tonne and fewer than 9 passengers.

12. The use by members of the specialist technical groups of the employer of the relevant vehicles is for home to work travel necessitated by being on-call and any other private use will, as already stated above in the 'relevant facts', be minor, infrequent and irregular.

13. Therefore, the use by members of the specialist technical groups of the employer of the relevant vehicles for home to work travel necessitated by being on-call is considered to be exempt under subsection 47(6) of the FBTAA as all the required conditions will be met.

Question 3

1. Section 8 of the FBTAA deals with the exemption of certain car benefits and states:

8(1) [Exempt application or availability for private use]

Except insofar as section 7 provides that the application or availability of a car held by a person is a benefit, the application or availability of a car held by a person is an exempt benefit.

8(2) [Exempt vehicles]

A car benefit provided in a year of tax in respect of the employment of a current employee is an exempt benefit in relation to the year of tax if:

(a) the car is:

(i) a taxi, panel van or utility truck, designed to carry a load of less than 1 tonne; or

(ii) any other road vehicle designed to carry a load of less than 1 tonne (other than a vehicle designed for the principal purpose of carrying passengers); and

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

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

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

8(3) [Provision of unregistered car]

...

8(4) [Provider cannot deduct under ITAA 97, sec 86-60]

...

2. As stated previously, the term 'car' is defined in subsection 136(1) of the FBTAA as having the meaning given in subsection 995-1(1) of the ITAA 1997 which is as follows:

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.

3. The type of motor vehicle for consideration in this particular instance is a Toyota Hilux 4x4 v6 petrol dual cab auto.

4. Additionally, MT 2024 provides the following guidance:

2. This Office [ATO] has been asked whether vehicles known as dual cabs are capable of qualifying for this work-related use exemption. Broadly, dual cabs are variants of conventional goods vehicles under which additional seating positions are provided behind the driver and front-passenger seats. They share a common chassis to which the single or dual passenger cab and alternate tray sections may be fitted.

...

4. ...[U]nder sub-section 8(2), a vehicle may qualify for the exemption if, while classified as a car for the purposes of Division 2 of Part III of the Act, it is a taxi, panel van, utility truck or any other road vehicle that, while designed to carry a load of less than one tonne, is not designed for the principal purpose of carrying passengers.

...

12. In the case of cab/chassis vehicles, the designed load capacity is to be ascertained after the body has been fitted to the vehicle, i.e. to satisfy the one tonne test, the margin between the gross vehicle weight and the basic kerb weight must not be less than one tonne plus the weight of the body which is ultimately attached to the vehicle.

13. Where, on the application of this test, it can be concluded that a particular dual cab model has a designed load capacity of one tonne or more, there will be no FBT liability if employee use of the vehicle during a particular FBT year consists solely of eligible work-related travel or private travel which is minor, infrequent and irregular.

...

19. Of those vehicles listed as being eligible for the work-related use exemption, the majority do so on the basis that they have a designed load capacity of one tonne or more. The remaining vehicles satisfy the requirement of not being designed principally for the carriage of passengers.

20. Accordingly, provided that employee use of these dual cab vehicles in a particular paragraph year is restricted to travel to and from work and any travel that is incidental to travel in the course of performing duties of employment, there will be no FBT liability.

5. MT 2024 lists the following Toyota Hilux dual cab vehicles (manufactured in 2005) as being eligible for the work-related use exemption:

· 4x4 V6 SR Petrol Dual Cab Auto Level 2

· 4x4 V6 SR Petrol Dual Cab Auto Level 2 + ABS

· 4x4 V6 SR5 Petrol Dual Cab Auto Level 3

· 4x4 V6 SR Petrol Dual Cab Manual Level 2

· 4x4 V6 SR Petrol Dual Cab Manual Level 2 + ABS

· 4x4 V6 SR5 Petrol Dual Cab Manual Level 3

6. Provided the Toyota Hilux 4x4 v6 petrol dual cab auto(s) in this particular case are any of the types above (and this would include more current versions of the same types) then, in the absence of any evidence to the contrary in a particular case, it would be expected that any such vehicle had a designed load capacity of one tonne or more.

7. In view of the above, it is considered that the relevant Toyota Hilux 4x4 v6 petrol dual cab auto(s) would not de defined as a 'car' for the purposes of the FBTAA. However, as subsection 8(2) of the FBTAA can only apply to 'cars' then the exemption provided by that particular aforementioned subsection (and section 8 of the FBTAA) cannot apply in this case.

8. Nonetheless, for similar reasons to those used to determine Question 2 it is also considered that, alternatively, the use by members of the specialist technical groups of the employer of the Toyota Hilux 4x4 v6 petrol dual cab auto(s) for home to work travel necessitated by being on-call is considered to be exempt under subsection 47(6) of the FBTAA as all the required conditions will be met.

Question 4

· It has been determined above, in Question 1, that the following vehicles are not 'cars' for the purposes of the FBTAA:

· Mercedes 'Vito' panel van

· Mercedes 'Sprinter' panel van

· Toyota 'Hi-Ace Commuter Bus'

· Toyota 'Coaster 'bus

· Hyundai 'iLoad' van

· Iveco '35S14' van

1. It also has been determined above, in Question 3, that the following vehicle is not a 'car' for the purposes of the FBTAA:

· Toyota Hilux 4x4 v6 petrol dual cab auto

2. Subsection 39A(1) of the FBTAA deals with the provision of benefits arising from car parking facilities and states:

39A(1) [Provision of car parking facilities]

If the following conditions are satisfied in relation to a daylight period, or a combination of daylight periods, on a particular day:

(a) during the period or periods, a car is parked on one or more premises of a person (the "provider"), where:

(i) the premises, or each of the premises, on which the car is parked are business premises, or associated premises, of the provider; and

(ii) a commercial parking station is located within a 1 km radius of the premises, or each of the premises, on which the car is parked; and

(iii) the lowest fee charged by the operator of any such commercial parking station in the ordinary course of business to members of the public for all-day parking on the first business day of the FBT year is more than the car parking threshold;

(b) ...

(c) any of the following applies:

(i) a car benefit relating to the car is provided on that day to an employee or an associate of an employee in respect of the employment of the employee;

(ii) ...

(d) ...

(e) ...

(f) during the period or periods, the car is parked at, or in the vicinity of, that primary place of employment;

(g) on that day, the car is used in connection with travel by the employee between:

(i) the place of residence of the employee; and

(ii) that primary place of employment;

(h) ...

the provision of parking facilities for the car during the period or periods is taken to constitute a benefit provided by the provider to the employee or the associate of the employee in respect of the employment of the employee.

3. 'Car benefit' is defined in subsection 136(1) of the FBTAA as meaning a benefit referred to in subsection 7(1) of the FBTAA in respect of a car either being applied to a private use by an employee or an associate or taken to be available for the private use by an employee or by an associate.

4. Taxation Determination TD 2011/14, Fringe benefits tax: for the purposes of section 39A of the Fringe Benefits Tax Assessment Act 1986 what is the car parking threshold for the fringe benefits tax year commencing on 1 April 2011, (for example) states:

1. The car parking threshold for the fringe benefits tax (FBT) year commencing on 1 April 2011 is $7.71. This replaces the amount of $7.46 that applied in the previous year commencing 1 April 2010.

...

3. Section 39A of the Fringe Benefits Tax Assessment Act 1986 sets out a number of conditions that must be met before car parking facilities provided by an employer to an employee will be subject to FBT.

4. Broadly two of these conditions are that a commercial car parking station is located within a 1 kilometre radius of the employer provided car park, and that the lowest fee charged by the operator of that car park is more than the car parking threshold. Where there is more than one commercial parking station located within 1 kilometre, the condition is satisfied where the lowest fee charged by any of the operators is more than the threshold.

5. However, despite the facts that that there may be in this case a commercial car parking station located within a 1 kilometre radius of the employer provided car park and also that the lowest fee charged by the operator of that car park is more than the car parking threshold these factors alone do not affect the prime underlying requirement of paragraph 39A(1)(a) of the FBTAA (and also, for example, that of subparagraph 39A(1)(c)(i) of the FBTAA in relation to car benefits) that the relevant vehicle being parked must, firstly, be a 'car' for the purposes of the FBTAA.

6. As explained in the following paragraphs of Taxation Ruling TR 96/26, Fringe benefits tax: car parking fringe benefits:

6. For the purposes of Division 10A of the FBTAA, a 'car' means a motor vehicle being;

* motor car, station wagon, panel van or utility;

* any other goods-carrying vehicle (including a four wheel drive vehicle) with a designed carrying capacity of less than one tonne;

* any other passenger-carrying vehicle with designed carrying capacity of fewer than nine occupants.

7. Excluded from the definition are panel vans and utilities designed to carry a load of one tonne or more.

8. Parking provided for vehicles other than cars will not give rise to a car parking benefit.

Therefore, paragraph 39A(1)(a) of the FBTAA (and, consequently, car parking benefits overall under section 39A of the FBTAA) cannot apply in this case as all of the relevant vehicles are not 'cars' for the purposes of the FBTAA.

Issue 2:

Question 1

1. Paragraph 58G(1)(b) of the FBTAA deals with exemption for certain motor vehicle parking facilities and states:

58G(1) [Motor vehicle parking facilities]

Each of the following benefits is an exempt benefit:

(a) ...

(b) a residual benefit where the recipients benefit consists of motor vehicle parking facilities.

2. As already said above, in basic terms, a residual benefit under section 45 of the FBTAA is a benefit that does not fall within one of the other more specific benefit types contained in the FBTAA.

3. 'Recipients benefit' is defined in subsection 136(1) of the FBTAA as meaning, simply, 'the benefit to which the residual benefit relates'.

4. The relevant motor vehicles in this instance are as follows:

· Mercedes-vito panel vans

· Mercedes-sprinter vans

· Toyota Hi-Ace vans

· Hyundai iLoad vans

· Toyota Hi-Ace commuter buses

· Toyota Coasters

· Iveco vans

· Toyota Hilux 4x4 v6 petrol dual cab auto

5. It has been determined above, in Question 4 of Issue 1, that all of the above listed motor vehicles when parked at, or in the vicinity of, the relevant employee's primary place of employment will not give rise to car parking benefits under section 39A of the FBTAA.

6. It is also considered that no other type of benefits will arise under any of the other provisions of Subdivision A of Divisions 2 to 11 inclusive of the FBTAA by virtue of any of the above motor vehicles being parked at designated parking spaces at any of the employer's premises.

7. Therefore, the benefits that may arise to employees of the employer by virtue of any of the above motor vehicles being parked at designated parking spaces at any of the premises of the employer will constitute residual benefits under section 45 of the FBTAA.

8. The ATO guide Fringe benefits tax: a guide for employers provides the following relevant guidance:

16.1 What is a car parking fringe benefit?

Very broadly, a car parking fringe benefit may arise for each day on which you (the employer) provide a car parking space for the use of an employee.

Specifically, a car parking fringe benefit arises only if all of the following conditions are satisfied:

· ...

· ...

16.9 Exempt benefits - motor vehicle parking

The following car parking benefits provided to employees are exempt from FBT:

· residual benefits

· ...

· ...

· ...

Residual benefits

Parking you provide that does not satisfy all of the criteria set out in 16.1 is a residual benefit that is exempt from FBT.

...

20.2 Transport exemptions

...

Motor vehicle parking (section 58G)

· The following car parking benefits are exempt from FBT:

· residual benefits

· ...

· ...

· ...

Residual benefits

Employer-provided parking that is not a car parking fringe benefit is a residual benefit that is exempt from FBT.

9. It is, therefore, concluded that as the benefits that may arise to employees of the employer by virtue of any of the above motor vehicles being parked at designated parking spaces at any of the premises of the employer will constitute residual benefits the requirements of paragraph 58G(1)(b) of the FBTAA are met and such parking will be exempt under that paragraph.