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Ruling

Subject: Reportable fringe benefits - excluded fringe benefits

Question 1

Will the provision of a car fringe benefit to your employee be subject to the fringe benefits tax reporting requirements under subsection 5E(3) of the Fringe Benefits Tax Assessment Act 1986 for the FBT year?

Answer

When the car was actually used by another employee for private purposes, the car fringe benefit provided to the asset inspector employee will not be subject to the FBT reporting requirements.

This ruling applies for the following periods:

1 April 2010 - 31 March 2011

The scheme commences on:

1 April 2010

Relevant facts and circumstances

The employer provides vehicles to staff for both work purposes and private use. Where one tonne utilities are provided by the employer, for work purposes, fringe benefits tax (FBT) has not been paid. Where employer provides passenger vehicles that are driven home at night, employer applies FBT legislation to each of these vehicles as they are deemed to be available for private use, and FBT is paid accordingly.

The job of an employee regularly involves the driving along roads all day starting and finishing from his place of residence. It also involves some night work.

It was determined that a passenger vehicle designed to carry a load of less than 1 tonne and fewer than 9 passenger, is the most suitable vehicle for the employee.

The employer has applied the fringe benefits legislation to that vehicle, FBT is paid by the employer on the vehicle and the grossed up value is reported on the employee's statement of earnings.

The employee objected to the grossed up value being reported on his statement of earnings as he believes that

· the vehicle is not able to be used by him for private purposes;

· the vehicle is only used for work purposes and

· the vehicle is a specific purpose vehicle chosen.

The vehicle is not available to other employees whilst the employee is using the car for work-related purpose. The car is left at the depot when the employee is on leave.

When the employee is on leave, the car is left for use by other employees for private purposes and attending conferences and seminars.

You stated that the use of the car being provided to other employees gave rise to a car fringe benefit during the year.

The employer consented to the car being used by other employees.

Relevant legislative provisions

Subsection 5E(3) of the Fringe Benefits Tax Assessment Act 1986

Regulation 3F of the Fringe Benefits Tax Regulations 1992

Reasons for decision

Excluded fringe benefit in relation to an employee, employer and the year of tax, has the meaning given in subsection 5E(3) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA). You do not have to allocate the excluded benefits to employees or report them on payment summaries.

Paragraph (i) of subsection 5E(3) of the FBTAA includes a benefit prescribed by the regulations for the purposes of this paragraph.

Pooled or shared car reporting is excluded by regulation 3F of the Fringe Benefits Tax Regulations 1992 (FBTR).

In order for the benefit to be an excluded benefit:

· the benefit provided to the employee must be either a car fringe benefit or an exempt car benefit,

· there must be an additional use of the same car during the year which gives rise to a car fringe benefit or a exempt car benefit for a different employee, and

· the employer must direct, or consent to, the use of the car by each employee.

In these circumstances, the car will be a pooled or shared car during the FBT year and the reporting exclusion will apply to each of the employees' use of that car.

A car is defined in subsection 136(1) of the FBTAA to have the meaning given by subsection 995-1(1) of the Income Tax Assessment Act 1997. That meaning being, '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.

The car used by your employee is a car because it is designed to carry a load of less than 1 tonne and fewer than 9 passengers.

For the FBT year, when your employee was on annual leave, the car was left at the employer's business premises. You consented to the car being used by other employees to attend conferences/seminars and for private purposes.

The use of that car being provided to other employees gave rise to a car fringe benefit as the car was for private use by other employees and the benefit was not an exempt car benefit. The car was shared during this period.

For the FBT year, there was a taxable value and FBT was paid by you on the car.

Subregulation 3F(1) of the FBTR is satisfied.

Therefore, car fringe benefits were excluded from having to be reported on the individual employee's respective payment summaries for the year.