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Edited version of your written advice
Authorisation Number: 1012915085380
Date of advice: 24 November 2015
Ruling
Subject: Fringe benefits tax
Question 1
Do the vehicles that you have modified satisfy paragraph 8(2)(a) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)?
Answer
Yes
This ruling applies for the following periods:
Year ended 31 March 2016
Year ended 31 March 2017
Year ended 31 March 2018
The scheme commences on:
2015
Relevant facts and circumstances
This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.
You currently own a number of cars which are primarily used for work related travel by your employees. These cars have proved extremely reliable and you are reluctant to trade them in on new vehicles at this point on time.
These cars are primarily to carry passengers and are sold as passenger cars. However, to improve the practicality of these cars that are used by your employees for work related travel you modify the cars to essentially convert them into 4 door 'vans'.
At this point in time, the rear seats are folded down, a flat plywood floor is fitted and both the plywood floor and the seats are bolted down. A metal safety cargo barrier is then fitted behind the driver's and passenger seats.
There is a strictly enforced policy in place that the only private use of the car will be minor, infrequent and irregular in addition to any work related travel.
Relevant legislative provisions
Fringe Benefits Tax Assessment Act 1986, subsection 8(2)
Reasons for decision
While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision.
Question 1
Summary
The vehicles that you have modified satisfy paragraph 8(2)(a) of the FBTAA.
Detailed reasoning
An employee's private use of a car will be an exempt benefit where the conditions in subsection 8(2) of the FBTAA are satisfied.
In accordance with paragraph 8(2)(a) of the FBTAA the car must be:
(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);
Miscellaneous Taxation Ruling 2033 Fringe Benefits Tax: application of subsection 8(2) exemption to modified cars, considers whether modifications to vehicles originally designed as passenger cars will result in the modified vehicles being eligible for the exemption under subsection 8(2) of the FBTAA.
The ruling looks at the type of modification done to the car to determine whether the modification has changed its inherent design from that of a passenger carrying vehicle.
Paragraph 9 of MT 2033 requires that modifications actually effect a permanent change to the car, to the extent that they are not capable of being readily reversed so that the car could be used alternatively as a passenger or non-passenger car on a regular basis.
Paragraph 10 of MT 2033 makes the point that removing or bolting down the rear seat alone would not be sufficient to change the design. However, this in conjunction with certain other modifications would allow the car to meet the definition in paragraph8(2)(a) of the FBTAA.
You have modified a number of your vehicles. The modifications include:
• the rear seats being folded down and bolted down
• a flat plywood floor being permanently bolted over the folded seats and
• a protective screen fitted behind the driver's seat.
The fact that the modification includes the rear seats being bolted down and a flat floor being permanently bolted indicates that the car is not capable of being readily reversed such that car could alternatively be used as a passenger or non-passenger vehicle. This is in keeping with paragraph 9 of MT 2033.
The modifications to the vehicles satisfy paragraph 8(2)(a) of the FBTAA.