Edited version of private ruling

Authorisation Number: 1011773880395

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Ruling

Subject: FBT- Car fringe benefits- Home to work travel

In determining the taxable value of a car fringe benefit using section 10 of the Fringe Benefits Tax Assessment Act 1986 (FBTAA), when ascertaining the business use percentage, does travel to and from work constitute a business journey for the purposes of completing log book records for:

· class 1 employees

· class 2 employees

· class 3 employees

· class 4 employees

Ruling:

In determining the taxable value of a car fringe benefit using section 10 of the FBTAA when ascertaining the business use percentage, does travel to and from work constitute a business journey for the purposes of completing log book records for:

· class 1 employees

· class 2 employees

· class 3 employees

· class 4 employees

Yes.

Year(s) of income or period(s) to which this ruling applies:

Year ended 31 March 2012

Year ended 31 March 2013

Year ended 31 March 2014

Commencement date of scheme:

1 April 2004

The scheme that is the subject of the ruling:

The employer is responsible for maintaining infrastructure and supplying services within a state of Australia.

The employer operates a radio network connecting all of its major facilities such as infrastructure, offices, depots and temporary work sites. The radio network is used to communicate with workers and monitor the condition of infrastructure. In addition to the radio network, the employer also has a substantial internal electrical distribution system.

To oversee the radio network and the electrical distribution system, the employer employs a group of four specialist classes of employees.

Employment duties

These employees main task is to perform field based activities and it is not an office-based group. The duties are performed in the metropolitan and regional areas.

The class 1 and 2 employees have the same levels of responsibility, but differ in that each is then made specific by their expertise.

Only the class 1 employees are responsible for supervising, undertaking extensive testing and commissioning.

All class 1 and 2 employees review contract documents to determine the constructability and practicability of the works that are proposed and also are involved in the commissioning of works to ensure that the constructed item functions as intended and is in accordance with drawings.

Class 3 and 4 employees have considerable commonality in duties and responsibilities to those in class 1 and 2, but differ in that each is then made specific by their expertise. Class 3 and 4 employees' role includes contract administration, contractor supervision and inspection of completed works for compliance standards.

From time to time they may attend the same job but may also arrive at or leave a job separately.

Time spent in field

Employees generally are expected to be out of the office for approximately large proportion of their time depending on the job stage. The duration of these jobs can vary quite dramatically. The jobs for an individual may cover a large geographical expanse and travelling time of a number of hours is not uncommon. The general rule is that any one employee could be involved at the one time, with a number of large to medium sized jobs or a number of small jobs anywhere within the metropolitan area.

The nature of the work requires them to start early and finish late with many hours spent driving between work sites, or to and from regional assignments. Depending on the duties to be performed, an employee may drive to a regional assignment or make alternative travel arrangements.

Time spent in office

The proportion of employees' time is spent in the employer's metropolitan office where they attend, among other aspects, routine site/project management meetings or specific meetings, catch up on paperwork, resolve queries and file reports.

The approximate apportion of time spent in the office is a collective average. Depending on the nature and location of a project, it is not unusual for an employee to be away from the office for a number of weeks. On these occasions the employee will maintain contact by remote log on to computer systems and by telephone.

More common is that an employee could be away from the office for a number of days at a time. At times during a year an employee may come to the office on a regular daily basis. During these times the tools and equipment continue to be carried in the employee's vehicle.

For the above reasons it is difficult to give an average daily time of an employee's attendance at the office.

The project manager schedules all planned activities and the employees organise their times and activities per the project plan.

Types of travel undertaken

An employee of any class may travel between their home and:

· a work site on the way to the office

· a work site and return

· the office and return.

Type of equipment carried by employees

Employees are provided with motor vehicles to transport tools/equipment to undertake field activities.

Basic tool kit and additional tools/equipment

Employees carry a basic tool kit consisting of a number of items in their vehicles at all times. These employees regularly use their tool kits, spare parts and a variety of technical manuals and handbooks which are stored within their vehicles in boxes/crates. Additional personal tools/equipment which supplement this basic kit are also carried by the employees.

There are no facilities available at the employer's office for the storage of the employee's tool kit and personal additional equipment. These employees must leave their tool kits in their assigned vehicle, thus eliminating the need and inconvenience of constantly packing and unpacking. Also there is the need for highly valuable and bulky equipment, some of which is owned by the employee to be transported from one work site to another, as there is no practical alternative.

The employees normally store all equipment in the vehicles and for security reasons they would cover it up by drawing a covering across the equipment. They are required by the employer to park their vehicles within the employee's residential premises and not on a public road.

Employer's (specialist) equipment

For some situations employees are required to carry with them more specialised, expensive and heavy testing equipment for particular tasks. When not in use this equipment is stored securely in the office.

The employer has also provided additional evidence of the type and variety of the tools/equipment carried by employees in their vehicles for field work.

Relevant provisions:

Fringe Benefits Tax Assessment Act 1986 Section 10.

Fringe Benefits Tax Assessment Act 1986 Subsection 136(1).

Explanation: (This does not form part of the notice of private ruling)

Issue 1

Using the operating cost method to calculate the taxable value of a car fringe benefit under section 10 of the FBTAA, the private use of a car by employees must be identified and distinguished from business journeys. The percentage of private use of a car for a particular year is the difference between 100 and the percentage of business use as evidenced by log book records.

According to subsection 136(1) of the FBTAA, 'log book records' include a record of the following information on a daily basis:

· the date(s) on which the journey began and ended

· the odometer readings at the start and end of each journey

· the kilometres travelled

· the purpose of each journey.

The purpose of each journey must be identified as either a business or private use.

'Private use' is defined under subsection 136(1) of the FBTAA as '…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'.

Miscellaneous Taxation Ruling MT 2027 provides guidance on the treatment of travel between home and work and under what circumstances that travel will be classified as private use for the purposes of valuing a car fringe benefit.

As a general rule, travel to and from work is private use of a vehicle. Paragraph 14 of MT 2027 states 'at its simplest, travel to work is private, travel on work is business.' The decision in Lunney v. Federal Commissioner of Taxation (1958) 100 CLR 478; (1958) 11 ATD 404; (1958) 7 ATR 166 affirms the position that travel between home and a person's regular place of employment or business is ordinarily private travel.

Travel incorporating the transport of bulky equipment

In FC of T v. Vogt 75 ATC 4073; (1975) 5 ATR 274 the Court held that the travel expense of a professional musician was attributed to the carriage of their equipment to produce assessable income, rather than travel to the place of performance. Pertinent to this decision was the finding that the storing of their bulky instrument/equipment, which was in nature of amplifying equipment and a variety of instruments, at home, was reasonable given the convenience and the purpose of practising on them.

Paragraph 37 of MT 2027 which is based on this principle, states that in certain limited circumstances the use of a car may be attributed to the necessary carriage of equipment rather than travel to and from work and, as such, accepted as business travel. This approach should be followed where the employee performs duties at a number of places, requiring the transport and use of equipment of substantial bulk such as to justify the need for a motor vehicle to transport it and where there are sound reasons for keeping the equipment at home.

The employer employs a specialist group of employees to maintain their operations and services. They are each provided with a motor vehicle to undertake field work in the metropolitan or regional areas of the state.

Performing duties at a number of places

The employees' duties require them to travel to a number of different locations and for various lengths of time in order to perform their specialised roles. They are essentially field based and not office based employees.

These employees are expected to be out of the office for a large proportion of their time, depending on the job stage. The duration of these jobs will extend from one day to many months. The jobs for an individual may cover a large geographical expanse and travelling time many hours is not uncommon. Depending on the nature and location of a project it is not unusual for an employee to be away from the office for periods up to two weeks or greater for certain projects. On these occasions the employee will maintain contact by remote log on to computer systems and by telephone.

The general rule is that employees in each class could be involved at the one time, with a number of medium to large and small jobs. More common is that an employee could be away from the office for a number of days at a time. The nature of their work requires them to start early and finish late with many hours spent driving between work sites, or to and from regional assignments.

The types of travel undertaken by these employees may include travel between their home and:

· a work site on the way to the office

· a work site and return

· the office and return.

It is acknowledged that at certain times during the year, an employee may come to the office on a regular basis. During these times the tools/equipment continue to be carried in the employee's vehicle. They would attend, among other aspects, routine site/project management meetings, resolve queries and prepare file reports/paper work. The approximate proportion of time spent in the office is only a collective average and is not meant to be a definitive percentage.

On this basis, it is concluded that each specialist group of employees are essentially field based and they are required to perform their duties at a number of different job sites.

Transport and use of substantial bulky equipment

For the employees to perform their duties at various field sites, they are required to carry a basic tool kit in their assigned vehicles at all times. These employees regularly use their tool kits, spare parts and a variety of technical manuals and handbooks which are stored within their vehicles in boxes/crates. Additional personal tools/equipment which supplement this basic kit are also carried by the employees.

Based on evidence provided of the equipment, we have concluded that the employees' basic tools and additional equipment are indeed bulky and cumbersome.

Sound reasons for storage of bulky equipment at home

There are no facilities available at the employer's office for the storage of the employees' tool kits and additional personal equipment. The employees must leave their tools/equipment in their assigned vehicles, thus eliminating the need and inconvenience of constantly packing and unpacking. There is also the need for highly valuable, bulky equipment, some of which is owned by the employee to be transported from one work site to another.

The employees normally store the equipment in the vehicles and for security reasons they would cover it up by drawing a covering across the equipment. They are required by the employer to park their vehicles within the employee's residential premises and not on a public road.

In summary the employees are required to store for use these bulky tools/equipment in their assigned vehicles at all times and no other storage is provided by the employer. Therefore it is considered that there are sound reasons for storing the equipment in their assigned vehicles at home.

It is acknowledged that for certain situations, these employees are also required to carry specialised, expensive and heavy test equipment for field work. However, as this equipment is normally stored at the employer's premises when not in use for field work, this equipment has not been included when considering the need to store equipment within employees' vehicles.

Conclusion

It is considered that the use of motor vehicles by each of the specialist group of employees equates to travel incorporating the transport of equipment as per MT 2027. This is a reflection of the practical necessity for these employees to carry their tools of trade at all times in their vehicles, so as to be readily available for each work site. Therefore any travel between home and work would be considered to be business journeys for the purpose of making log book records.