Edited version of your private ruling

Authorisation Number: 1012488148478

Ruling

Subject: FBT - Reportable fringe benefits

Question 1

Are you required to report any fringe benefits provided to your employees in their PAYG payment summary under Part XIB of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) for the following seventeen (17) vehicles:

a) buses fitted with chair lifts;

b) dual cab utility with a trailer;

c) vehicle permanently garaged at an employee's premise;

d) vehicles by specialists in community services;

e) vehicles used by other employees to conduct appointed duties and

f) vehicles used by employees?

Answer

a) no

b) no

c) yes

d) yes

e) no

f) yes

This ruling applies for the following periods:

1 April 2012 - 31 March 2013

The scheme commences on:

1 April 2012

Relevant facts and circumstances

1. The purpose of the association was the provision of a variety of health and welfare services to local residents.

2. The services have been funded by a number of Federal and State government bodies on an annual basis.

3. The funding agreements incorporate the provision of motor vehicles to particular employees, thereby allowing them to acquit their appointed duties in accordance with residual terms in the said agreements. One particular service requires employees to be on call twenty-four hours per day on a seven day cycle.

4. The association has X locations. Neither of which provide secure parking outside normal business hours, resulting in employees having to provide secure parking at their respective residential addresses.

5. The vehicles are primarily provided for the express purpose of their duties as outlined by the funding agreements with the respective government bodies.

6. Employees maintain their own private vehicles. Only in limited circumstances and with the express permission of management, employees use the employment provided vehicles for private purposes.

7. Employees are required, and in many cases have attended duties associated with their employment outside regular business hours, a situation not limited to those employees who are on call twenty-four hours per day and seven days a week.

8. There are a total number of vehicles operated by the association:

a. buses: fitted with chair lifts to transport clients to and from organised functions and appointments. They are designed to carry 12 passengers. One bus is garaged at the employee's residence and the other bus is garaged at a non-related party's home.

b. dual cab utility designed to carry a load of more than 1 tonne with a trailer to transport staff, tools and materials to perform appointed tasks such as carpentry or lawn maintenance for clients as prescribed by the association.

c. car designed to carry a load of less than 1 tonne and fewer than 9 passengers, is permanently garaged at an employee's premises who doesn't have a valid driver's licence.

d. vehicles consisting of 8-seater cars to transport families pursuant to the terms of the funding provided. Each of the specialists have the sole use of a vehicle to undertake community services on call twenty-four hours per day seven days per week.

e. cars designed to carry a load of less than 1 tonne and fewer than 9 passengers, were shared by other employees during the year in the conduct of their appointed duties.

f. cars designed to carry a load of less than 1 tonne and fewer than 9 passengers, were assigned to each officer. Each officer was the sole user of the vehicles.

Relevant legislative provisions

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

Fringe Benefits Tax Assessment Act 1986 Paragraph 5E(3)(i)

Fringe Benefits Tax Assessment Act 1986 Section 7

Fringe Benefits Tax Assessment Act 1986 Subsection 47(6)

Fringe Benefits Tax Assessment Act 1986 Section 58P

Fringe Benefits Tax Assessment Act 1986 Section 135P

Fringe Benefits Tax Assessment Act 1986 Subsection 136(1)

Fringe Benefits Tax Assessment Act 1986 Part XIB

Fringe Benefits Tax Regulations 1992 Regulation 3F

Reasons for decision

Reportable Fringe Benefits and Group Certificates

Employers are required to report on each employee's group certificate the employee's reportable fringe benefits amounts for the year of income under Part XIB of the Fringe Benefits Tax Assessment Act 1986 (FBTAA).

Public Benevolent Institutions (PBI) are required to keep records tracking the fringe benefits and quasi-fringe benefits provided to individual employees. Quasi-fringe benefits are essentially benefits that would have been fringe benefits except that they are provided by a public benevolent institution.

Employers that are PBI must allocate to the relevant employees the reportable quasi-fringe benefits amounts that are exempt solely because an employee works in or for the PBI.

Excluded fringe benefit

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

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 3F of the Fringe Benefits Tax Regulations 1992 (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.

Regulation 3F of the FBTR provides:

(1) For paragraph 5E (3) (i) of the Act, a benefit is an excluded fringe benefit if, during a year of tax:

(a) the benefit is a car benefit, as described in subsection 7 (1) of the Act, that is:

(i) a fringe benefit within the meaning of subsection 136 (1) of the Act; or

(ii) a benefit that:

(A) is an exempt benefit; and

(B) would have been a fringe benefit except that the benefit is an exempt benefit; and

(b) the car benefit relates to a car the provision of which gives rise to the benefit described in paragraph (a) for more than 1 employee.

(2) The fringe benefit is an excluded fringe benefit in relation to each of those employees.

(3) The fringe benefit is an excluded fringe benefit in relation to:

(a) the year of tax starting on 1 April 2007; and

(b) each later year of tax.

In general terms, the exclusion prescribed by regulation 3F of the FBTR for pooled or shared cars is available where a car held by an employer is used by two employees during the year of tax, where each employee is provided with:

· a fringe benefit which is a car benefit, or,

· an exempt benefit which is a car benefit which would have been a fringe benefit if it were not an exempt benefit.

Subregulation 3F(1)(a) of the FBTR requires the benefit to be a car benefit as described in subsection 7(1) of the FBTAA.

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.

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

Furthermore, benefits only need to be reported on the payment summary when the total taxable value of fringe benefits and quasi-fringe benefits not including excluded benefits for an employee in a fringe benefits tax (FBT) year exceeds $2000.00 under subsection 135P(1) FBTAA.

Where there is a reporting requirement, the grossed-up value is to be reported on the group certificate which ends on the 30 June immediately following the FBT year. For example, for the FBT year ending the 31 March 2013 benefits will be reported on the 30 June 2013 group certificate.

Cars and non-car motor vehicles

Subsection 136(1) of the FBTAA provides:

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

Chapter 7.1 of the Fringe benefits tax: a guide for employer states:

The following types of vehicles (including four-wheel drive vehicles) are cars:

· motor cars, station wagons, panel vans and utilities (excluding panel vans and utilities designed to carry a load of one tonne or more)

· all other goods-carrying vehicles designed to carry less than one tonne

· all other passenger-carrying vehicles designed to carry fewer than nine occupants.

Accordingly, groups of motor vehicles are classified as follows:

(a) The buses are not cars as they are designed to carry 12 passengers.

(b) A dual cab with a trailer designed to carry a load of more than 1 tonne does not satisfy the definition of a car.

(c) A vehicle designed to carry a load of less than 1 tonne and fewer than 9 passengers is a car.

(d) The 4WD and the 8-seater are cars that satisfy the definition of a car as they are passenger vehicles that carry a load of less than 1 tonne and carry less than 9 passengers.

(e) Vehicles designed to carry a load of less than 1 tonne and fewer than 9 passengers, are therefore cars.

(f) Vehicles, designed to carry a load of less than 1 tonne and fewer than 9 passengers, are therefore cars.

All of the vehicles are garaged at the relevant employees' home except for the bus in group (a). The cars garaged at employees' home will be treated as being available for the private use of the employees, and therefore, a car fringe benefit will arise under subsection 7(2) of the FBTAA.

This is the case even though the cars are used for private travel only in limited circumstances and with the express permission of management.

Group (a) - buses:

Any private use of a motor vehicle that is not a car may give rise to a residual fringe benefit.

Subsection 47(6) of the FBTAA deals with motor vehicles other than cars.

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.

A benefit will be a residual exempt benefit pursuant to subsection 47(6) of the FBTAA where the two requirements are satisfied.

The first requirement is to determine whether the motor vehicle is a taxi, panel van, utility or other commercial vehicle or other vehicle designed to carry a load of less than 1 tonne and not for the principle purpose of carrying passengers.

The vehicles are designed to carry 12 passengers. The employer has modified these vehicles by installing chair lifts to transport wheelchair clients. These vehicles as modified have a carrying capacity of more than one tonne. Thus they are not cars as defined for FBT purposes. The vehicles satisfy the first requirement.

They also satisfy the second requirement of minor, infrequent and irregular private use as only in limited circumstances and with the express permission of management that employees are allowed to use the vehicles for private purpose.

Therefore, the benefits satisfy the requirements under subsection 47(6) of the FBTAA to be exempt residual benefits.

As the benefits in group (a) are exempt under subsection 47(6) of the FBTAA, they are not fringe benefits; therefore, the benefits should not be included in the calculation of the individual fringe benefits amount.

You are not required to report these benefits on your employees' payment summary under Part XIB of the FBTAA in relation to the relevant FBT year.

Group (b) - a dual cab with a trailer:

Dual cabs qualify for the work-related use exemption only if they are either:

· designed to carry a load of one tonne or more, or more than 8 passengers, or

· while having a designed load capacity of less than one tonne, are not designed for the principal purpose of carrying passengers.

As you stated that the dual cab is designed to carry a load of more than one tonne and private use is minor, infrequent and irregular, therefore, it satisfies subsection 47(6) of the FBTAA and is an exempt benefit.

As the benefits in group (b) are exempt, not considered to be fringe benefits, therefore, the benefits should not be included in the calculation of the individual fringe benefits amount.

You are not required to report any of these benefits on your employees' payment summary under Part XIB of the FBTAA for the relevant FBT year.

Groups (c), (d) and (f) - cars assigned to employees

The 8-seater and a 4WD in group (c) satisfy the definition of a car as they are designed to carry a load of less than 1 tonne and fewer than 9 passengers.

As the employees in groups (c), (d) and (f) took the cars home and were garaged at the relevant employees' home. The vehicles will be treated as being available for the private use of the employees, and therefore, a car fringe benefit will arise under subsection 7(2) of the FBTAA.

Though the employee in group (c) did not have a valid driver's licence, having an employer held car garaged at his/her home will be treated as being available for private use of the employee or his/her associates under subsection 7(2) of the FBTAA.

In groups (c), (d) and (f), each officer was the sole user of the cars. As a car benefit has not been provided to more than one employee the car benefits provided to these employees will not be excluded benefits for the purposes of subparagraph 5E(3)(i)(b) of the FBTR.

For the purpose of reporting the quasi-fringe benefits, you are required to calculate the taxable value of these benefits and report the grossed-up value on each of your employees' payment summary under Part XIB of the FBTAA for the relevant FBT year.

Group (e) - cars shared by employees

The cars in group (e) were used by more than one employee for their work-related use to carry out their appointed duties. The use of these cars was shared by more than one employee.

Regulation 3F(1) of the FBTR is satisfied to be pooled or shared cars and the fringe benefits are excluded fringe benefits under regulation 3F(2) of the FBTR for the purpose 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.

You are not required to report any benefits in relation to the use of these cars on your employees' payment summary under Part XIB of the FBTAA for the relevant FBT year.