FBT on private use of utility vehicles
A motor vehicle designed to carry a load of more than one tonne may still be a reportable fringe benefit for an employee. The ATO has confirmed in a recent Private Binding Ruling any consistent use of these vehicles is a residual fringe benefit.
With the fringe benefits year fast approaching, it is important that your claims are accurate. Even though there are exemptions for vehicles such as utilities, some fringe benefits may be counted as a residual benefit.
For the purposes of FBT, the following trips are exempt for utilities:
- travel undertaken in the course of producing assessable income
- travel of the employee between home and work, and
- for private travel, trips that are minor, infrequent and irregular.
We recommend that you keep a record of all the trips that aren’t in these categories. For example, if you make regular private trips. An example of this may be a regular family-related trip, or regular weekend trips.
Our firm would be pleased to chat with you if you require any further clarification on this matter. Please do not hesitate to give us a call.
Norman Ruan
Accountant
T: 02 9984 7774
E: normanr@northadvisory.com.au
Martin van der Saag
Director
T: 02 9984 7774
E: martinv@northadvisory.com.au
“A motor vehicle designed to carry a load of more than one tonne may still be a reportable fringe benefit for an employee.”
About the author
Marius Fourie - Director & Business Advisor
As Director and Business Advisor, Marius uses his accounting expertise and empathetic skills to work directly with business owners and help them feel at ease with their finances.
Marius saw a common need in clients that just wasn’t being met by accounting providers.
That need was for clear, open communication and streamlined accounting services that didn’t come padded out with any unnecessary features.
Business owners just don’t have time to compare different accounting firms to see which one has the best packages with the best inclusions (many of which they would pay for but never use).
Key Takeaways
Utility vehicles can still be subject to fringe benefits tax if used privately by employees.
Even though some commercial vehicles are thought to be exempt by design, regular personal use can make them taxable.
Travel between home and work is usually treated differently to other private travel.
Such travel may qualify as exempt under specific FBT provisions if it meets the tests for limited private use.
Regular non-work travel — such as family or weekend trips — will likely trigger FBT.
If an employee uses the vehicle frequently for personal reasons, the employer should treat it as a fringe benefit for tax purposes.
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Frequently Asked Questions
What is the focus of the FBT rules on utility vehicles?
The rules relate to whether an employer must pay fringe benefits tax when an employee uses a work vehicle (such as a ute) for private purposes — including family or weekend use beyond work duties.
Does providing a utility vehicle automatically trigger FBT?
No — not all utility vehicles are subject to FBT. If private use is limited and fits certain exemptions (for example minimal personal travel outside of work), then FBT may not apply. However, consistent personal use can make it a taxable fringe benefit.
What kinds of travel can be exempt from FBT for vehicles?
Travel that may be exempt includes trips directly related to producing assessable income, travel between home and workplace, and private travel that is minor, infrequent and irregular.
Why is private use important in determining FBT liability?
FBT is triggered by the provision of a benefit — here the use of a vehicle for private purposes. Regular private trips such as family outings or weekend travel mean the benefit is no longer work-only and can attract FBT.
How should employers manage vehicle use to minimise FBT risk?
Employers should monitor and record how vehicles are used, set clear private-use policies, and distinguish between exempt travel and ongoing private use. Consistent non-work use suggests a fringe benefit exists.
Why is it important for employers to review private use before the FBT year ends?
Because the FBT year end approaches quickly, and the article highlights the importance of ensuring claims are accurate to avoid issues.
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