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Edited version of private ruling
Authorisation Number: 1011773771306
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Ruling
Subject: Car According to FBTAA
Question 1
Is the Ford Ranger 2010 XLT a car as defined under subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)?
Advice/Answers
Yes
This ruling applies for the following period
Year ending 31 March 2012
Year ending 31 March 2013
Year ending 31 March 2014
The scheme commenced on
1 April 2011
Relevant facts
The employer is intending to enter into a lease in which it will provide a Ford Ranger 2010 XLT to an employee.
This vehicle will be provided to a specific employee who will have full use of the vehicle including unlimited private use. The vehicle will be garaged at or near the employee's home.
The following details have been provided by the employer regarding the Ford Ranger 2010 XLT. They include the following:
· Gross Vehicle weight 3009 Kg
· Basic Kerb Weight 1989 Kg
· Accessory Bull Bar (to be fitted by the dealer) 45 Kg
As an optional accessory Ford offers a bull bar which is specifically designed for use on the Ford Ranger 2010 XLT as a dealer installed option. It is this 'official' Ford bull bar that will be fitted to the vehicle. The bull bar will essentially replace the front bumper of the vehicle.
The Ford Ranger 2010 XLT is being sold as new by an authorised Ford dealer and the bull bar will be installed by the dealer prior to delivery.
Relevant legislative provisions
Subsection 136(1) of the FBTAA
Subsection 995-1 of the ITAA 1997
Reasons for decision
Question 1
Is the Ford Ranger 2010 XLT a car as defined under subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)?
Summary
Once the bull bar is fitted the Ford Ranger 2010 XLT becomes a car as defined under subsection 136(1) of the FBTAA, based on its design load capacity of 975 kg being less than 1 tonne.
Detailed reasoning
Car according to FBTAA
Subsection 136(1) of the FBTAA, provides a definition of what constitutes a car. It defines that a car has the meaning as contained in subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997).
Subsection 995-1 of the ITAA 1997 defines a car as:
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.
Vehicles Design carry load
Miscellaneous Taxation Ruling 2024 MT 2024 provides a description of how to calculate a vehicles designed carry load, paragraph 11 states in part:
… the designed load capacity of a motor vehicle is to be taken as the gross vehicle weight as specified on the compliance plate by the manufacturer (broadly, the maximum all-up loaded weight), reduced by the basic kerb weight of the vehicle. For this purpose, basic kerb weight is synonymous with unladen weight, as specified in the Australian Design Rules, being the weight of the vehicle with a full tank of fuel, oil and coolant together with spare wheel, tools (including jack) and installed options. It does not include the weight of goods or occupants.
To determine the vehicles designed carry load and to establish whether the vehicle constitutes a car according to the FBTAA, the following calculation needs to be carried out.
Designed load capacity = Gross Vehicle weight reduced by the basic kerb weight
Gross vehicle weight 3009
Basic Kerb weight - 1989
Design load capacity 1020 kg
Installation of Bull bar
The vehicle will be fitted with a bull bar accessory by an authorised Ford dealer as indicated on the Ford Australia website. The purpose of the bull bar which is to be fitted on the vehicle according to the Ford Australia website is to:
· Help protect the front end of vehicle in the case of an accident
· Be Airbag compatible for seamless integration with the vehicle's optional safety pack
An important aspect of the bull bar is that once it has been fitted by an authorised Ford dealer, the bull bar will essentially replace the vehicles front bumper, and form and important component of the vehicle. The bull bar will subsequently become part of the vehicles design and will work with the vehicles designed safety pack.
Installed Option Illustration
When determining whether the bull bar which will be fitted by an authorised Ford Dealer constitutes an installed option, it is important to assess other recognised installed options which will subsequently affect the vehicles basic kerb weight.
Alloy wheels form an essential part of a vehicle in terms of calculating its designed load capacity. They are offered as optional accessories which can be fitted by the manufacturer or an authorised dealer to a vehicle. Once fitted alloy wheels replace the original wheels offered but still form part of the basic kerb weight of a vehicle.
Alloy wheels can be compared to the bull bar which is to be fitted by an authorised dealer on the Ford Ranger XLT 2010 model; they replace a standard part and become an essential component of the vehicle and an installed option.
Based on the specific bull bar being designed and manufactured by Ford Australia for the Ford Ranger XLT 2010 model, the bull bar would constitute an installed option for the motor vehicle.
When assessing whether an accessory is an installed option consideration must be given to whether the vehicle was in use by the employee prior to installation of the accessory. If the vehicle was in use by the employee prior to the bull bar being installed, it could not be said that bull bar was part of the original design, in this instance we would need to identify whether the adding of a bull bar affects the overall design of the vehicle.
Miscellaneous Taxation Ruling MT 2033 in paragraph 7 states in part:
… a vehicle's design is generally established at the time of manufacture. In order to change that design it would be necessary that the modifications effect a permanent alteration to the vehicle.
Adding a bull bar would increase the weight of the vehicle by 45kgs and because it replaces the original front bumper bar with one that incorporates the bull bar.
This could be seen as a permanent modification to the vehicle because it permanently alters it as once installed it becomes part of the vehicle itself and reduces the load capacity.
Impact on vehicles Basic Kerb weight
Based on the bull bar being classified as an installed option, the basic kerb weight of the vehicle will increase.
Basic kerb weight 1989
Bull Bar + 45
New Basic Kerb weight 2034 kg
Due to the bull bar being fitted on the vehicle and subsequently affecting the basic kerb side weight, the vehicle will have a different design load capacity. The vehicles new design load capacity is outlined below:
Gross vehicle weight 3009
Basic Kerb weight - 2034
Design load capacity 975 kg
According to the definition established in the FBTAA, once the bull bar is installed the vehicle will constitute a car based on its designed or modified load capacity of 975 kg being less than 1 tonne.