Hayley Lock and James Trainor discuss the ATO's latest guidance on work vehicles and FBT.
On 11 July the Australian Taxation Office (ATO) released Practical Compliance Guide PCG 2018/3 (the PCG). The PCG sets out circumstances in which the ATO will generally accept that certain vehicles used privately by employees may be exempt from fringe benefits tax (FBT). The PCG applies from the year of tax commencing 1 April 2018.
Certain vehicles such as utility trucks and vans may be exempt from FBT where their private use (excluding home to work travel) is minor, infrequent and irregular. Until now, employers have largely had to judge for themselves where the limits of “minor, infrequent and irregular” lie.
The ATO states that it will generally accept that the exemption criteria are satisfied where all of the following apply:
Importantly, the PCG indicates that a written statement (including email) from the employee that he or she has complied with the last of these conditions would be sufficient for the employer to rely on.
Employers who choose not to apply these guidelines may still be eligible for the FBT exemption. However they should ensure that they maintain sufficient documentary evidence to support their self-assessment, as establishment of the facts would be all-important in the event of an ATO review.
The PCG should be an important and useful step in assisting employers with managing their FBT position, and is a welcome initiative from the ATO. The ATO will also allow employers to rely on the previous draft of the PCG (PCG 2017/D14) for the year of tax ended 31 March 2018.