WARNING! ATO Guidance on Employer Provided Utes and Vans

Do you provide your employees with a ute believing it’s Fringe Benefits Tax (FBT) free?  It is generally believed that where an employer provides an employee with a utility type of vehicle, it will be exempt from FBT, in fact, eligible vehicles are only exempt from FBT where private use of the vehicle is ‘minor, infrequent and irregular’.

The ATO has recently issued guidance to reduce audit costs and to provide employers with certainty to determine if the private use of vehicles is limited for the purposes of the exemption.

Employers do not need to rely on the ATO Guideline, but if they do, they do not need to keep records about employee’s use of the vehicle that demonstrate that the private use of the vehicle is ‘minor, infrequent and irregular’ and the ATO will not devote compliance resources (i.e., audit) to review that you can access the car related exemptions for that employee.  You will however need to check that you continue to meet the following requirements in each year you provide the vehicle and wish to rely on the Guideline.

WHAT ARE THE GUIDELINES?

1. you provide an eligible vehicle* to a current employee
2. the vehicle is provided to the employee to perform their work duties
3. you take all reasonable steps to limit private use of the vehicle and have measures in place to monitor such use
4. the vehicle has no non-business accessories
5. the vehicle had a GST-inclusive value less than the luxury car tax threshold (currently $66,331) at the time the vehicle was acquired
6. the vehicle is not provided as part of a salary packaging arrangement8 and the employee cannot elect to receive additional remuneration in lieu of the use of the vehicle, and
7. your employee uses the vehicle to travel
   1. between their home and their place of work and any diversion adds no more than two kilometres to the ordinary length of that trip
   2. no more than 750 kilometres in total for each FBT year for multiple journeys taken for a wholly private purpose, and
   3. no single, return journey for a wholly private purpose exceeds 200 kilometres.

*For a list of eligible vehicles, please contact us.