For a long time there has been a misconception that work vehicles such as utes and panel vans have a blanket FBT exemption, and the ATO has got this in its sights.
About a year ago, the ATO issued a draft Guideline on the private use that is acceptable for a work vehicle to remain FBT exempt. It required a fair bit of monitoring by the employer, but the more recent version (PCG 2018/3) which was released in July 2018 seems more workable.
The new Guideline, which applies from 1st April 2018, gives employers greater certainty that they are operating within the rules. This will apply if:
• The vehicle is provided for work use;
• The vehicle cost (incl GST) was below the luxury car tax threshold at the time it was bought;
• It is not provided as part of a salary sacrifice arrangement;
• You have a policy that limits private use of the vehicle;
• The employee uses the vehicle to travel between home and work, and any diversion from this is limited to 2 kilometres;
• Other private use of the vehicle is restricted to no more than 1,000 kilometres per year, with no trip being more than 200 kilometres.
• The employer receives confirmation from the employee on the last two points and is “satisfied on reasonable grounds” of the vehicle’s private use (i.e. don’t turn a blind eye to what really went on)
Talk to us about how we can help you implement some processes for your business. The Guideline is available here.