Proposed Changes To FBT & Commercial Vehicles

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The way that company vehicle expenses are taxed could be about to change.

The ATO (Australian Taxation Office) is reviewing FBT (Fringe Benefits Tax) exemptions for certain types of commercial vehicles. They say this is in response to “unusually high work-related expense claims”.

The current system allows company vehicles such as work utes, and anything ‘not designed primarily to carry passengers’, to be used for ‘minor, infrequent and irregular’ personal use.

But the ATO has been looking to tighten up these rules by introducing much more specific criteria to identify the kind of personal usage that will qualify for tax relief. The proposals are for:

  • Any diversion to the normal trip between home and work which adds less than two kilometres.
  • No more than 750 kilometres of personal usage in each FBT year.
  • No single private journey to exceed 200 kilometres.

It means that company vehicles which currently qualify for the exemption could be set to lose their status with related expenses incurring FBT costs.

The new rules are yet to be finalised, we are expecting that the final ruling will be published this month and will apply to car and residual benefits provided in the current FBT year.

If these changes impact you we will advise any extra record keeping measures you may need to put in place to avoid an unwarranted FBT bill.

 

This document contains general advice only and is prepared without taking into account your particular objectives, financial circumstances and needs. The information provided is not a substitute for legal, tax and financial product advice. Before making any decision based on this information, you should speak to a licensed financial advisor who should assess its relevance to your individual circumstances.  While The Field Group believes the information is accurate, no warranty is given as to its accuracy and persons who rely on this information do so at their own risk. The information provided in this bulletin is not considered financial product advice for the purposes of the corporations Act 2001.

About the author

The Field Group is composed of experts in the fields of Xero accounting, personal tax, self-managed superannuation, audit services, business services, bookkeeping, bench marking, business structuring and ATO Compliance. Based in Melbourne, The Field Group are also able to work with clients all over Australia and are the market leader for accounting services in the Ringwood, Croydon, Chirnside Park, Lilydale and general Melbourne eastern suburb region.

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