Edited version of private advice

Authorisation Number: 1051631728327

Date of advice: 11 March 2020

Ruling

Subject: Motor vehicle provided to company director - 'work-related use' exemption

Question

Would a Toyota LandCruiser 70 Series Wagon Workmate or a Toyota LandCruiser 70 Series Wagon GXL provided by a company ('the Employer') to a director ('the Director') qualify for the 'work-related use' exemption available under subsection 8(2) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)?

Answer

Yes.

This ruling applies for the following periods:

1 April 2020 to 31 March 2024.

The scheme commences on:

1 April 2020.

Relevant facts and circumstances

The Employer is proposing to purchase a second-hand vehicle to provide to one of its directors ('the Director'), with the vehicle being either a Toyota LandCruiser 70 Series:

1.     Wagon Workmate, or

2.     Wagon GXL.

The vehicle will be provided to the Director to enable the Director to perform their work duties. The Director's work is of an itinerant nature and most jobs are travelled to directly from the Director's home. The Employer's office is used mostly as a warehouse for storage of equipment.

Upon purchase of the vehicle, the Employer will have in place a policy that will limit the Director's private use of the vehicle to travel between home and work; travel incidental to travel in the course of performing employment-related duties; and non-work-related use that is minor, infrequent and irregular.

The vehicle that will be provided to the Director will be garaged at or near the Director's place of residence.

The relevant specifications of a Toyota LandCruiser 70 Series Wagon Workmate and a Toyota LandCruiser 70 Series Wagon GXL are as follows:

Relevant legislative provisions

Fringe Benefits Tax Assessment Act 1986 Subsection 7(1)

Fringe Benefits Tax Assessment Act 1986 Subsection 7(2)

Fringe Benefits Tax Assessment Act 1986 Subsection 8(1)

Fringe Benefits Tax Assessment Act 1986 Subsection 8(2)

Fringe Benefits Tax Assessment Act 1986 Subsection 136(1)

Fringe Benefits Tax Assessment Act 1986 Subsection 148(1)

Income Tax Assessment Act 1997 Subsection 995-1(1)

Taxation Administration Act 1953 Schedule 1 Section 12-40

Reasons for decision

In order to determine whether the Employer would qualify for the 'work-related use' exemption available under subsection 8(2) of the FBTAA, it is firstly necessary to consider whether the provision of a Toyota LC70 Series Wagon Workmate/GXL by the Employer to the Director would constitute a 'car fringe benefit'.

Car fringe benefit

Section 7 of the FBTAA sets out the circumstances in which the use of a car will be a taxable fringe benefit.

Subsection 7(1) of the FBTAA describes what constitutes a car fringe benefit, as follows:

7(1) [Car applied to, available for employee's private use]

Where:

(a) at any time on a day, in respect of the employment of an employee, a car held by a person (in this subsection referred to as the "provider"):

(i) is applied to a private use by the employee or an associate of the employee; or

(ii) is taken to be available for the private use of the employee or an associate of the employee; and

(b) either of the following conditions is satisfied:

(i) the provider is the employer, or an associate of the employer, of the employee;

(ii) the car is so applied or available, as the case may be, under an arrangement between:

(A) the provider or another person; and

(B) the employer, or an associate of the employer, of the employee;

that application or availability of the car shall be taken to constitute a benefit provided on that day by the provider to the employee or associate in respect of the employment of the employee.

Subsection 7(2) of the FBTAA deals with the availability of a car for an employee's private use when the car is garaged at or near an employee's residence.

7(2) [Car garaged at employee's residence]

Where, at a particular time, the following conditions are satisfied in relation to an employee of an employer:

(a) a car is held by a person, being:

(i) the employer;

(ii) an associate of the employer; or

(iii) a person (other than the employer or an associate of the employer) with whom, or in respect of whom, the employer or an associate of the employer has an arrangement relating to the use or availability of the car;

(b) the car is garaged or kept at or near a place of residence of the employee or of an associate of the employee;

the car shall be taken, for the purposes of this Act, to be available at that time for the private use of the employee or associate, as the case may be.

Chapter 7 of the ATO publication entitled Fringe Benefits Tax - A Guide for Employers outlines the following in relation to car fringe benefits:

7.1 What is a car fringe benefit?

A car fringe benefit most commonly arises where you (the employer) make a car you 'hold' available for the private use of an employee (or the car is treated as being available). A car you hold generally means a car you own or lease.

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, and

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

You make a car available for private use by an employee on any day that:

·        it is actually used for private purposes by the employee, or

·        the car is available for the private use of the employee.

A car is treated as being available for private use by an employee on any day that:

·        the car is not at your premises, and the employee is allowed to use it for private purposes, or

·        the car is garaged at the employee's home.

A car that is garaged at an employee's home is treated as being available for the private use of the employee regardless of whether they have permission to use it for private purposes. Similarly, where the place of employment and residence are the same, the car is taken to be available for the private use of the employee.

Taxation Determination TD 94/16 Fringe benefits tax: where an employee is provided with a car by the employer and the car is kept in safe storage (e.g. in a commercial garage) while the employee is travelling, under what circumstances is that car taken to be available for private use under section 7 of the Fringe Benefits Tax Assessment Act 1986 (TD 94/16) states that where an employer's car is kept in safe storage at or near the employee's place of residence, it will be taken to be available for the employee's private use regardless of any prohibition on the use of the car.

In considering whether a car fringe benefit has been provided in respect of the proposed scheme, each of the conditions as provided in subsections 7(1) and 7(2) of the FBTAA are discussed below.

Will the motor vehicle be 'held' by the provider (the Employer)?

As stipulated in the Fringe Benefits Tax - A Guide for Employers publication, a car is 'held' if it is owned or leased.

According to the facts provided, the Employer proposes to purchase a motor vehicle for the Director to use mainly in business operations.

Therefore, the motor vehicle will be held by the provider, who is the Employer.

Is the Employer's motor vehicle a 'car'?

Subsection 136(1) of the FBTAA provides that a 'car' has the meaning given by subsection 995-1(1) of the Income Tax Assessment Act 1997. That provision defines a 'car' as:

...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.

According to the facts for the proposed scheme, the motor vehicle (with 5 seats) to be purchased by the Employer (either a Toyota LC70 Series Wagon Workmate or a Toyota LC70 Series Wagon GXL) is designed to carry fewer than 9 passengers.

In terms of whether a five-seater Toyota LC70 Series Wagon Workmate/GXL has a designed load capacity of less than one tonne, paragraph 11 of Miscellaneous Taxation Ruling MT 2024 Fringe benefits tax: dual cab vehicles eligibility for exemption where private use is limited to certain work-related travel (MT 2024) provides a description of how to calculate a vehicle's 'designed carry load':

11.  ...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.

The Vehicle Standard (Australian Design Rule - Definitions and Vehicle Categories) 2005 contains the following definitions:

GROSS VEHICLE MASS (GVM) - the maximum laden mass of a motor vehicle as specified by the 'Manufacturer'.

MANUFACTURER - the name of the person or company who accepts responsibility for compliance with the Australian Design Rules and to whom the 'Compliance Plate' approval certificate is issued.

UNLADEN MASS [or 'Unladen Weight'] - the mass of the vehicle in running order unoccupied and unladen with all fluid reservoirs filled to nominal capacity including fuel, and with all standard equipment.

'Standard equipment' refers to the common equipment that a specific model of car is supplied with as specified and provided by the manufacturer.

According to the facts of the proposed scheme, the motor vehicle (a Toyota LC70 Series Wagon Workmate/GXL) to be purchased by the Employer will have a Gross Vehicle Mass of 3,060kg, and an Unladen Mass of either 2,275kg (for a Toyota LC70 Series Wagon Workmate) or 2,265kg (for a Toyota LC70 Series Wagon GXL). The designed load capacity of these vehicles is thus 785kg (3,060kg - 2,275kg) for a Toyota LC70 Series Wagon Workmate, or 795kg (3,060kg - 2,265kg) for a Toyota LC70 Series Wagon GXL, both of which are less than one tonne.

Therefore, if the Employer purchases a Toyota LC70 Series Wagon Workmate/GXL, such a vehicle will meet the definition of a 'car' for the purposes of the FBTAA.

Is the car provided in respect of the Employee's employment?

It is firstly necessary to consider whether the Director is an employee of the Employer.

The term 'employee' is defined in subsection 136(1) of the FBTAA to mean includes a current, future or former employee. A 'current employee' is defined in subsection 136(1) of the FBTAA to mean 'a person who receives, or is entitled to receive, salary or wages'.

'Salary or wages' is defined in subsection 136(1) of the FBTAA to be a payment from which an amount must be withheld under one of a number of specified provisions in Schedule 1 to the Taxation Administration Act 1953 (TAA) which deal with payments to employees, company directors and office holders.

In particular, section 12-40 of Schedule 1 to the TAA deals with payments to company directors, which provides that:

A company must withhold an amount from a payment of remuneration it makes to an individual:

(a) if the company is incorporated - as a director of the company, or as a person who performs the duties of a director of the company; or

...

As such, the Director is an employee of the Employer.

As per subsection 136(1) of the FBTAA, the term 'in respect of' - in relation to the employment of an employee - includes by reason of, by virtue of, or for or in relation directly or indirectly to, that employment.

Subsection 148(1) of the FBTAA stipulates that a benefit will be provided in respect of the employment of an employee:

• whether or not the benefit also relates to some other matter or thing
• whether the employment is past, present or future
• whether or not the benefit is surplus to the recipient's requirements
• whether or not the benefit is also provided to another person
• whether or not the benefit is offset by any inconvenience or disadvantage
• whether or not the benefit is provided or used, or required to be provided or used, in connection with any employment
• whether or not the provision of the benefit is in the nature of income, and
• whether or not the benefit is provided as a reward for services rendered, or to be rendered, by the employee.

In J & G Knowles & Associates Pty Ltd v Federal Commissioner of Taxation (2000) 96 FCR 402; 2000 ATC 4151; (2000) 44 ATR 22 (Knowles), the full Federal Court - in examining the meaning of 'in respect of' an employee's employment - held that the phrase required a 'nexus, some discernible and rational link, between the benefit and employment', though noted that 'what must be established is whether there is a sufficient or material, rather than a causal, connection or relationship between the benefit and the employment'. A similar view was also held in Essenbourne Pty Ltd v FC of T 2002 ATC 5201 and Starrim Pty Ltd v FCT (2000) 102 FCR 194; [2000] FCA 952; 2000 ATC 4460; (2000) 44 ATR 487.

To establish whether a sufficient or material connection will exist between the provision by the Employer of a car and the employment of the Director, it is necessary to consider the circumstances in which the Toyota LC70 Series Wagon Workmate/GXL will be provided.

According to the facts of the proposed scheme, the Employer will purchase a car for the Director to use mainly in business operations. As such, it is clear that, for the purposes of the proposed scheme, the provision by the Employer of a car to the Director would be considered to be 'in respect of an employee's employment'.

Is the car applied or taken to be available for the private use of the Director?

'Private use' is defined in subsection 136(1) of the FBTAA to mean any use that is not exclusively in the course of producing assessable income of an employee.

In AAT Case 9824 (1994) 29 ATR 1246, a car was garaged at premises that were both the employee's residence and the employer's business premises. It was held that the car was garaged at the employee's residence and thus was available for private use.

As per the principles embodied in TD 94/16 and the ATO's Fringe Benefits Tax - A Guide for Employers publication, a car that is garaged at an employee's home is treated as being available for private use of the employee regardless of whether they have permission to use it for private purposes. In particular, where the place of employment and place of residence are the same, the car is taken to be available for the private use of the employee.

According to the facts of the proposed scheme, the vehicle that will be provided to the Director will be garaged at or near the Director's place of residence.

This means that the car will be deemed for the purposes of subsection 7(2) of the FBTAA to be available for the private use of the Director whilst the car is garaged at the Director's place of residence.

Therefore, as per the facts of the proposed scheme, a motor vehicle (which meets the definition of a 'car') will be held by the Employer and provided to the Director (an employee) in respect of the Director's employment. The car will be deemed to be available for the private use of the Director as it will be garaged at the Director's home. As such, each of the conditions in subsections 7(1) and 7(2) of the FBTAA will be satisfied.

A car fringe benefit would thus arise in respect of the provision of a Toyota LC70 Series Wagon Workmate/GXL to the Director pursuant to section 7 of the FBTAA.
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'Work-related use' exemption

Under subsection 8(2) of the FBTAA, a liability for FBT will not arise where the private use of certain vehicles by employees during a particular year of tax is limited to certain work-related travel and non-work-related use that is minor, infrequent and irregular. A vehicle may qualify for the exemption if, while classified as a car for the purposes of Division 2 of Part III of the FBTAA, it is a taxi, panel van, utility truck or any other road vehicle that, while designed to carry a load of less than one tonne, is not designed for the principal purpose of carrying passengers.

Subsection 8(2) of the FBTAA states:

8(2) [Exempt vehicles]

A car benefit provided in a year of tax in respect of the employment of a current employee is an exempt benefit in relation to the year of tax if:

(a)   the car is:

                                             (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); and

(b)   there was no private use of the car 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 by the employee or an associate of the employee, being other use that was minor, infrequent and irregular.

Each of the conditions in subsection 8(2) of the FBTAA are considered below.

Paragraph 8(2)(a)

Subparagraph 8(2)(a)(i) of the FBTAA is not applicable as a Toyota LC70 Series Wagon Workmate/GXL is not a taxi, panel van or utility truck.

In terms of subparagraph 8(2)(a)(ii) of the FBTAA, a five-seater Toyota LC70 Series Wagon Workmate/GXL constitutes 'any other road vehicle' and - as previously established - has a designed load capacity of less than one tonne.

To determine if subparagraph 8(2)(a)(ii) is satisfied, it is necessary to determine whether or not a five-seater Toyota LC70 Series Wagon Workmate/GXL is a vehicle designed for the principal purpose of carrying passengers.

Taxation Determination TD 94/19 Fringe benefits tax: is the method outlined in Taxation Ruling MT 2024 appropriate for determining whether a vehicle, other than a dual or crew cab, is 'designed for the principal purpose of carrying passengers' and thereby ineligible for the work-related use exemption available under subsection 8(2) of the Fringe Benefits Tax Assessment Act 1986 (TD 94/19) indicates that, in determining the principal purpose for which any other vehicle was designed, regard should be had to the following factors including, but not limited to:

·        the appearance and presentation of the vehicle

·        any relevant promotional literature and the emphasis evident in marketing

·        the vehicle's specifications

·        load carrying capacity, and

·        passenger carrying capacity.

This is known as the 'principal purpose test'.

Each of these factors are considered below in respect of the Toyota LC70 Series Wagon Workmate/GXL. In considering these factors, the following is noted:

·        As the Employer intends to purchase a second-hand Toyota LC70 Series Wagon Workmate/GXL, and the age of the vehicle has not yet been determined, the specifications for the latestmodel as provided on the Toyota Australia website[1] have been relied upon for the purposes of this ruling.

·        The analysis of each of these factors is comparable to that provided in Class Ruling CR 2012/81 Luxury car tax: meaning of 'luxury car', which also considered the principal purpose for which a Toyota LC70 Series vehicle was designed.

Appearance and presentation of the vehicle

Although the Toyota LandCruiser family sport utility vehicle (SUV) model offshoot (LC60 Series and the later LC80 Series) have developed significantly since their launch, the LC70 Series has retained its basic model styling and has continued to be sold for industry purposes since its launch in 1984. Prior to this date, the LandCruiser models were marketed as the LC20 Series (from 1959) and used principally in the heavy construction industry, whilst in 1960, the model was upgraded to the LC40 Series and further used in commercial applications, such as by the military.

In addition, the historical development of the LC70 Series vehicles indicate that the appearance and presentation of the LC70 Series vehicles have a different design, construction and purpose to SUVs/derivatives, such as the LC60 and LC80 Series, and have retained their basic rugged look and model styling characterised in the earlier LC20 and LC40 Series.

According to the historical development, original design and purpose of the LC70 Series vehicles, the LC70 Series vehicles still carry many of the features from the LC20 and LC40 Series.

Any relevant promotional literature and the emphasis evident in marketing

The brochure for the latest-model LC70 Series vehicles on the Toyota Australia website describes the LC70 Series as follows:

The LandCruiser legend follows a path right back to 1957 and the Snowy Mountains Scheme. It was here the original LandCruiser forged its place in Australian folklore. Then through the years, as the work and demands got tougher, LandCruiser got stronger. From the Bass Strait pipeline projects to the roughest rural, mining and construction sites, LandCruiser became the 'go to' vehicle you could always count on. Today, LandCruiser 70 Series are the uncompromising workhorses of the LandCruiser line-up. Delivering legendary strength combined with muscled-up looks, stacks of grunt and a truckload of impressive features and comforts inside.

...

With a trusty beast that goes almost anywhere, does almost anything, you'll also appreciate the

flexibility to load it the way you need. Across the LandCruiser 70 Series, you'll find versatile seating

and cabin arrangements that are designed to handle the demands of many different jobs and situations.

...

LandCruiser 70 Series boasts all the grunt and muscle you need to get into unchartered territory.

...

The rugged good looks of the LandCruiser 70 Series are more than just skin deep. The tough steel body is built upon a steel chassis to provide a strong stable platform.

...

Not only is the wide body design suitably muscular with real on-road presence, it also accommodates an awesome powerplant up front. And the A-pillar mounted snorkel helps your engine breathe better, particularly in dusty conditions.

...

Regardless of the LandCruiser 70 you choose, you'll have a vehicle purpose built from the ground up to get stuck into the rough stuff.

...

A real workhorse needs a big heart, and it'd be hard to find anything with more get-up and go than the LandCruiser 70 Series.

...

The 4.5 litre V8 Turbo diesel engine delivers enough grunt to help make tough jobs easy. With 151kW of power coming on strong at just 3,400rpm, and a massive 430Nm of torque all the way from 1,200-3,200rpm, you get quick acceleration, big pulling-power on steep hills and muscle to haul heavy loads.

...

Then when it comes to harnessing such impressive power, the proven 5-speed manual transmission delivers smoothly across high and low range, even when faced with testing terrain and carrying some heavy loads.

This factor therefore tends to support the characterisation of the LC70 Series vehicles as primarily not designed to carry passengers.

Vehicle's specifications

Chassis type:

In addressing the significance of the specifications of the LC70 Series vehicles, it is necessary to understand the LC70 Series vehicles' design.

There are different chassis types used in the design of vehicles. The two main types of chassis are the ladder frame chassis and the integral or monocoque chassis.

A ladder frame chassis is best described as side rails with cross beams, like a ladder shape and is widely used for light commercial vehicles such as pick-ups through to the heavy truck.

Integral chassis types are found in the mass-produced car. The advantage of this structure is that the structure weighs less than other types of chassis structures, costs less and produces a quieter car - features which are important for passenger vehicles.

The LC70 Series vehicles use a ladder frame chassis. A ladder frame chassis design lacks a number of key features found in passenger cars, including low production cost, lower weight and quieter operation.

The use of a ladder frame chassis would tend to support the proposition that the LC70 Series vehicles have not been primarily designed for carrying passengers.
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Engine type:

The LC70 Series vehicles are available only with diesel engines. Diesel engines have better fuel economy than petrol engines but tend to become noisy and vibrate on their mountings as the operating load is reduced. The combustion process is quieter and smoother in petrol engines resulting in greater passenger comfort. Petrol engines are also cheaper than diesel engines.

This factor also tends to support the characterisation of the LC70 Series vehicles as primarily not designed to carry passengers.

Axles:

Axles are structures maintaining the position of the wheels relative to each other and to the vehicle body. These can be divided into rigid axles (with a rigid connection of the wheels to an axle), independent wheel suspensions (in which the wheels are suspended independently of each other), and semi-rigid axles (a form of axle that combines the characteristics of rigid axles and independent wheel suspensions).

Rigid axles have a number of disadvantages that are a consideration in passenger cars, but which can be accepted in commercial vehicles. Rigid axles are no longer found in standard passenger cars and are only used in four-wheel drive and special all-terrain vehicles.

The rigid axles found in the LC70 Series vehicles also tend to support the proposition that these vehicles have not been primarily designed for carrying passengers.

Transmission:

Transmission takes the power from the engine to the wheels and can be manual or automatic.

The LC70 Series vehicles are only available in manual transmission. Automotive literature suggests that the absence of an automatic gear indicates the LC70 Series vehicles are not principally designed for convenience and city-driving.

Gears:

The design of a vehicle depends on the conditions at which the vehicle has to operate and determines the gear ratios.

Commercial and rear wheel drive vehicles usually have gear ratios ranging from 4:1 to approximately 0.8:1. By contrast, a front wheel drive passenger car will have a range from approximately 12:1 to 3:1.

The LC70 Series vehicles (latest model) have the following gear ratios:

Based on the above, the LC70 Series vehicles' gear ratios are comparable to those appropriate for a 'light van', and are significantly different to those that would be appropriate for a passenger carrying vehicle, such as the 'popular car' or 'powerful saloon'.

With regard to the specifications outlined above, no single specification can be considered as determinative of the absolute use or design of the vehicles. However, the specifications as outlined, considered as a collective, indicate that the Toyota LC70 Series Wagon Workmate/GXL are not principally designed for the carriage of passengers.

Load carrying capacity and passenger carrying capacity

According to the facts of the proposed scheme, the motor vehicle (a five-seater Toyota LC70 Series Wagon Workmate/GXL) to be purchased by the Employer will have a Gross Vehicle Mass of 3,060kg, and an Unladen Mass of either 2,275kg (for a Toyota LC70 Series Wagon Workmate) or 2,265kg (for a Toyota LC70 Series Wagon GXL). Therefore, as determined above in line with paragraph 11 of MT 2024, the designed load capacity is 785kg and 795kg for a Toyota LC70 Series Wagon Workmate and a Toyota LC70 Series Wagon GXL respectively.

Application of the 'principal purpose test' (as per the factors listed in TD 94/19) to a five-seater Toyota LC70 Series Wagon Workmate/GXL - in particular, the appearance and presentation, relevant promotional material, specifications, number of passengers these vehicles are designed to carry, together with their load carrying capacity - demonstrates that these vehicles can have a 'dual purpose'.

Clause 4.5.2 of Vehicle Standard (Australian Design Rule - Definitions and Vehicle Categories) 2005 states that:

A vehicle constructed for both the carriage of persons and the carriage of goods shall be considered to be primarily for the carriage of goods if the number of seating positions times 68kg is less than 50 percent of the difference between the 'Gross Vehicle Mass' and the 'Unladen Mass'.

In considering whether a five-seater Toyota LC70 Series Wagon Workmate/GXL is constructed primarily for the carriage of goods or persons, the following is noted:

In respect of a five-seater Toyota LC70 Series Wagon Workmate/GXL, as the number of seating positions times 68kg (340kg) is less than 50 percent of the difference between the 'Gross Vehicle Mass' and the 'Unladen Mass' (392.5kg/397.5kg), each of these vehicles is considered to be constructed primarily for the carriage of goods (and thus not for the principal purpose of carrying passengers).

Upon weighing all of the relevant factors of the 'principal purpose test' (as provided in TD 94/19), it is considered that a five-seater Toyota LC70 Series Wagon Workmate/GXL is not a vehicle designed for the principal purpose of carrying passengers.

Therefore, as a five-seater Toyota LC70 Series Wagon Workmate/GXL is a car that is designed to carry a load of less than one tonne and is not a vehicle designed for the principal purpose of carrying passengers, the proposed scheme would satisfy paragraph 8(2)(a) of the FBTAA.

Paragraph 8(2)(b)

For paragraph 8(2)(b) of the FBTAA to apply in respect of the proposed scheme, there must be no private use of the Toyota LC70 Series Wagon Workmate/GXL during the FBT year and when the car benefit was provided, other than work-related travel of the Director and other private use by the Director (or an associate of the Director), being use that is minor, infrequent and irregular.

The term 'work-related travel' is defined in subsection 136(1) of the FBTAA as follows:

work-related travel, in relation to an employee, means:

(a) travel by the employee between:

(i) the place of residence of the employee; and

(ii) the place of employment of the employee or any other place from which or at which the employee performs duties of his or her employment; or

(b) travel by the employee that is incidental to travel in the course of performing the duties of his or her employment.

The FBTAA does not specify what is meant by the terms 'minor', 'infrequent' and 'irregular' in relation to private use and, therefore, each of those terms will take their ordinary meaning in the context in which they are used.

The Macquarie Dictionary (Online) provides the following definitions for each the terms 'minor', 'infrequent' and 'irregular':

minor

adjective

1.     lesser, as in size, extent, or importance...

infrequent

adjective

1.     happening or occurring at long intervals or not often...

2.     not constant, habitual, or regular...

irregular

adjective

2.     not characterised by any fixed principle, method, or rate: irregular intervals.

As per the facts of the proposed scheme, upon purchase of a Toyota LC70 Series Wagon Workmate/GXL, the Employer will have in place a policy that will limit the Director's private use of the vehicle to travel between home and work; travel incidental to travel in the course of performing employment-related duties; and non-work-related use that is minor, infrequent and irregular.

As such, the proposed scheme would satisfy paragraph 8(2)(b) of the FBTAA.

Therefore, as both paragraphs 8(2)(a) and 8(2)(b) of the FBTAA would be satisfied under the proposed scheme, the provision of a Toyota LC70 Series Wagon Workmate or a Toyota LC70 Series Wagon GXL by the Employer to the Director in respect of the Director's employment would constitute an exempt benefit pursuant to subsection 8(2) of the FBTAA.

[1] https://www.toyota.com.au/landcruiser-70