Apr 13, 2026 Andrew Low

ATO getting personal on work vehicles

While the end of the financial year is still some distance away, one major milestone on the tax calendar that isn’t is the end of the Fringe Benefit Tax (FBT) year which will end on 31 March 2026.

In the lead-up to this, the ATO has announced (via its small business newsroom) that one of the focus areas this year is the overlooking and misreporting of FBT on the private or personal use of work vehicles.

Providing a work vehicle to an employee is common for many jobs that require employees to undertake business-related travel, whether that be seeing customers, visiting different work sites or making deliveries. While on face value it may seem that there is no ‘benefit’ being provided to the employee as the vehicle is used predominantly for work or the vehicle may even be an ‘exempt’ vehicle for FBT purposes, it does not automatically exempt the employer from paying FBT or having to lodge an FBT Return.

FBT is payable by the employer providing the benefit to the employee or their associates and is payable on the private portion of the benefit only. The ATO defines personal or private use in the ordinary sense, and gives examples of this including:

• Garaging the vehicle at the employee’s home;
• Doing private tasks on the way to or from work

To establish the private vs business use of a vehicle, the employer needs to maintain adequate records to substantiate the extent to which the vehicle is used for work. The ATO is clear that assumptions, estimates, or informal understandings with staff are not enough. Employers must be able to demonstrate, with evidence, that a vehicle is being used as intended and that any private use is correctly captured.

Logbooks are one of the most reliable methods of establishing business use. These need to be kept for a continuous 12‑week period and must accurately record each trip, including the purpose of the journey, odometer readings and dates. Employers should also maintain clear policies outlining what constitutes acceptable business use, as well as ensure that employees are aware of and comply with these expectations.

Exempt Vehicles

Another area the ATO is turning its attention to is the presumption by employers that certain vehicles – particularly dual‑cab utes – are automatically exempt from FBT.

A dual cab vehicle can be exempt from FBT when it is designed to carry:

• A load of up to one tonne and is not primarily designed to carry passengers;
• A load of one tonne or more;
• 9 or more passengers

However, this is not a simple blanket exemption. The vehicle must also meet the test of being used only for work‑related travel and ‘minor, infrequent and irregular’ private use.

This is where many employers inadvertently fall short. A dual‑cab ute that spends most of its time on job sites may still attract FBT if employees are using it for weekend camping trips, school drop‑offs, or other regular private travel.  Even something as simple as the vehicle being garaged at home is treated as availability for private use, unless the employer can clearly demonstrate that private use is restricted, and can back this up with documentation.

In practical terms, employers should review their fleet policies before the FBT year ends, ensure they have accurate records for all vehicles, and confirm whether their vehicles genuinely qualify for an exemption. Doing this can help avoid unexpected FBT bills, penalties or additional scrutiny from the ATO.

If you’re unsure whether FBT applies to your business’ work vehicles, or if you need assistance in lodging an FBT return, contact your RDL advisor who will be happy to assist.