If your clients supply work vehicles to their employees, it’s important to check how they are used and whether any exemptions apply to determine if it attracts fringe benefits tax (FBT).
Personal use of a work vehicle is one of the most common fringe benefits – and one of the most frequently overlooked.
Stay informed so you can help your clients understand and remain compliant with their FBT obligations and avoid penalties.
When does private use attract FBT?
FBT generally applies when a work vehicle is made available for private use - even if it’s not actually used. Private use includes any travel not directly related to the employee’s job, such as:
- taking the vehicle on beach or camping trips
- school drop-offs and pick-ups (even if it’s on the way to or from work)
- running personal errands (like picking up groceries)
- transporting friends or family for non-work-related purposes
- parking the vehicle at the employee’s home (even if only for security reasons).
Exemptions may apply depending on the vehicle’s specifications and the nature of the private use.
Common FBT mistakes to avoid
As a tax agent, you can help your clients avoid mistakes that can result in unexpected liabilities. The most common issues we see are:
- incorrectly treating private use as business use
- assuming dual cab utes are exempt from FBT – exemptions only apply if the vehicle is eligible for the FBT exemption and private use is limited
- incorrectly classifying vehicles
- poor record keeping that doesn’t support the claims or FBT calculations made
- not reporting or paying on time.
For more information and resources, visit ato.gov.au/FBToncars