If you or your crew use a work vehicle for personal purposes, your business might be liable for fringe benefits tax (FBT). The Australian Taxation Office lifts the bonnet on FBT to help you get your obligations right and avoid unwanted consequences.

If your business provides its employees with non-cash perks in addition to their regular wage or salary, then you might be providing a ‘fringe benefit’, which could have tax implications for your business.

FBT is a tax that businesses pay when they provide certain benefits to employees, their families or associates and is separate from income tax.

Some common types of benefits that employers may provide include:

• personal use of a work vehicle
• car parking
• gym or health club memberships
• meals and entertainment
• living away from home allowance
• reimbursement for a personal expense, like car registration or insurance

Letting your employees use a work vehicle for personal purposes is a common perk offered by employers – but it can attract FBT. There are also certain records you need to keep. It’s important to understand the difference between business and private use so you get your FBT reporting right and avoid unexpected penalties.

What counts as ‘private’ use of a work vehicle?

Most work vehicles, including many four-wheel drives, may attract FBT if it’s made available to an employee for personal use (even if they don’t use them). This counts as a car fringe benefit.

So, if you or your staff are using a work vehicle for anything not directly related to the job, it could be considered as private use – and that means FBT may apply. Examples of private use include:

• running personal errands or grocery runs (even if it’s on the way to and from work)
• school drop-offs and pick-ups
• weekend beach or camping trips
• parking the work vehicle at or near the employee’s home (even if it’s only for security reasons)

If your employees’ private use of a work vehicle is limited, then that use may be exempt from FBT, but only if it’s an eligible vehicle.

What about dual-cab utes?

There’s a common myth that dual-cab utes are automatically exempt from FBT – but that’s not the case. If your dual-cab ute is a work vehicle and it’s available for personal use, FBT may still apply.

To qualify for an exemption, your dual-cab ute must meet two conditions. It must:

• Be an eligible vehicle, which means it’s designed to carry:
  • a load of one tonne or more
  • more than eight passengers (including the driver), or
  • a load of less than one tonne and not primarily designed for carrying passengers, and
• Only be used for minor, infrequent and irregular private purposes – like the occasional dump run.

So, if your work dual-cab ute is doubling as the family taxi or being used for frequent personal trips, it’s time to check your FBT setup and get on top of your obligations.

Think FBT might apply? Here’s what to do

If your business is (or you think it is) providing fringe benefits, here’s what you need to do. Follow these four key steps to help you stay FBT compliant:

1. Identify the type of fringe benefit you’re providing: This may include private use of a work vehicle (including dual cab utes), providing meals or free concert tickets.
2. Determine the taxable value of the fringe benefit: You can do this by self-assessing your FBT liability. There are handy calculators and guides to help you do this on the ATO website.
3. Lodge, report and pay: You’ll need to lodge an annual FBT return, report each employee’s reportable fringe benefits amount (RFBA) through Single Touch Payroll or on your employees’ payment summary, and pay the FBT you owe.
4. Keep records: Like logbooks, receipts and calculations. Even if you think your business may be exempt from FBT, you may still need records to show you’re exempt.

Providing a car fringe benefit?

Use the ATO’s handy online tools to help you steer your car FBT obligations in the right direction:

• Take the free car fringe benefits tax course – learn how to identify car fringe benefits, calculate your FBT and explore ways to reduce your liability. Access the course from the taxsuperandyou.gov.au website.
• Use the FBT car calculator – quickly calculate and determine your car FBT liability. Try it at gov.au/FBTCarCalculator.

Don’t let FBT catch you off guard

Nailing your FBT obligations doesn’t have to be a hassle. Here are some practical tips to help get you on track:

• Know your FBT obligations: If you’re providing your employees with a non-cash perk, your business may be liable for FBT. It’s important to know what type of benefits attract FBT and what records you need to keep.
• Remember the key dates: The FBT year runs from 1 April to 31 March. Your annual FBT return needs to be lodged and any FBT paid by 21 May or 25 June, if you use a tax agent.
• Keep records up to date: Different benefits have different record-keeping requirements, so ensure your records are up to date to support your FBT position. Even if no FBT is payable, you need to keep records to avoid an unexpected liability.

For more information on FBT, visit ato.gov.au/FBT or talk to your trusted tax advisor.