The Commissioner has released a draft guidance on his compliance approach to the exemptions of the Fringe Benefits Tax Assessment Act 1986 for minor, infrequent and irregular private use of vehicles.
Employers can choose to rely on this draft guideline if:
- they provide an eligible vehicle to a current employee
- the vehicle is provided to the employee to perform their work duties
- the employer takes all reasonable steps to limit private use of the vehicle and have measures in place to monitor such use
- the vehicle has no non-business accessories
- the vehicle had a GST-inclusive value less than the luxury car tax threshold at the time the vehicle was acquired
- the vehicle is not provided as part of a salary packaging arrangement and the employee cannot elect to receive additional remuneration in lieu of the use of the vehicle, and
- the employee uses the vehicle to travel:
- between their home and their place of work and any diversion adds no more than two kilometres to the ordinary length of that trip
- no more than 750 kilometres in total for each FBT year for multiple journeys taken for a wholly private purpose, and iii. no single, return journey for a wholly private purpose exceeds 200 kilometres.
Where employers choose to rely on the guideline:
- they do not need to keep records about their employee’s use of the vehicle that demonstrate that the private use of the vehicle is minor, infrequent and irregular,
- the Commissioner will not devote compliance resources to review that the employer can access the car-related exemptions for that employee.
However, employers will need to check that they continue to meet the requirements of the guideline in each year they provide the vehicle and wish to rely on the guideline.
Source: CCH Tax Week Issue 1 2018