Where a car owned or leased by an employer is made available to an employee, a car fringe benefit may arise. For FBT purposes a car is any of the following:
If an employer supplies a vehicle to an employee which does not satisfy the above criteria and the car is used privately, the right to use the vehicle can be a residual fringe benefit.
An employer makes the car available for an employee’s private use when an employee or their associate:
A car garaged at or near to an employee’s home is treated as available for the employee or the employee’s associates private use, regardless of whether the employee or employee’s associates have permission to use the car privately.
Usually, travel to and from work is treated as private use of the vehicle, but there are some exceptions.
For example, an employee’s private use of a taxi, panel van or utility designed to carry less than one tonne is exempt from FBT if the private use of this vehicle is limited to:
Other benefits supplied by an employer to an employee in relation to cars, whilst not constituting a car benefit, may instead constitute another type of fringe benefit. For example, where the employer provides to the employee for private purposes:
Employers must ask their employees to sign a no-private-use declaration for a qualifying business-related benefit to be an exempt fringe benefit e.g. overseas business travel. Employee declarations must be in the format required by the Australian Taxation Office (ATO). Employers can receive employee declarations electronically, but the declaration must be signed by the employee using an electronic signature. Employers are obligated to obtain all employee declarations by the employer’s FBT return lodgment date, or by 21 May if the employer is not required to lodge an FBT return. Declarations should not be sent to the ATO, although employers are required to keep the declarations as a part of their business records. Different declarations may be used for different types of expenditure and for different employees in the same FBT year (ending 31 March).
Please contact Raoul Stevenson or your Nexia Edwards Marshall Adviser for assistance with your FBT return and employee no-private-use declarations.
The material contained in this publication is for general information purposes only and does not constitute professional advice or recommendation from Nexia Edwards Marshall. Regarding any situation or circumstance, specific professional advice should be sought on any particular matter by contacting your Nexia Edwards Marshall Adviser.