Fringe Benefits Tax - Exempt Motor Vehicles

https://www.ato.gov.au/General/Fringe-benefits-tax-(FBT)/In-
detail/Exemptions-and-concessions/Fringe-Benefits-Tax---Exempt-Motor-
Vehicles/
Last modified: 04 Dec 2018
QC 21311

Fringe benefits tax – exempt motor vehicles

The following information will help you work out when the use of certain motor
vehicles is exempt from fringe benefits tax (FBT)

Find out about:

Eligibility criteria
Eligible vehicles
Load carrying capacity calculation
Record keeping requirements

Eligibility criteria
https://www.ato.gov.au/General/Fringe-benefits-tax-(FBT)/In-
detail/Exemptions-and-concessions/Fringe-Benefits-Tax---Exempt-Motor-
Vehicles/?page=2
Last modified: 04 Dec 2018
QC 21311
The private use of a motor vehicle is exempt from FBT if all of the following
conditions are satisfied:

the vehicle is a panel van, utility (ute) or other commercial vehicle (that is, one
not designed principally to carry passengers)
the employee's private use of such a vehicle is limited to
travel between home and work

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 travel that is incidental to travel in the course of duties of employment
non-work related use that is minor, infrequent and irregular (for example,
occasional use of the vehicle to remove domestic rubbish).
The exemption will also apply to the private use of a taxi if the taxi is owned or
leased (for example, not let on hire), if the employee's private use is limited to:

travel between home and work

travel that is incidental to travel in the course of duties of employment
non-work related use that is minor, infrequent and irregular (for example,
occasional use of the vehicle to remove domestic rubbish).
For more guidance on the private use of cars and home to work travel, refer to
MT 2027 Fringe benefits tax: private use of cars: home to work travel.

The exemption also applies to non-work related use by an employee's associate

that is minor, infrequent and irregular.

See Table 1 below for information about when usage requirements are not met.

Table 1: Usage requirements are not met

If: Then:

the vehicle is a your employee's use of the car is a car fringe benefit and all
car of the private use of the car, including travel between home
your and work, is taken into account in determining the business
employee's percentage.
use of the car Note: If no log book records are maintained, the percentage
exceeds the of private use will be 100%.
limitations set
out above, and
you elect to
use the
operating cost
method

the vehicle is a your employee's use of the car is a car fringe benefit and all
car of the private use of the car, including travel between home
your and work, is taken into account in working out when the car
employee's was used or available for the private use of the employee.
use of the car
exceeds the
limitations set
out above, and
you use the
statutory
formula

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 method

the motor your employee's use of the vehicle is a residual fringe

vehicle is not a benefit.
car, and Note: The operating cost method may be used for valuing
your the benefit. Alternatively, if there is extensive business use
employee's the cents per kilometre method may be used to value the
use of the benefit.
vehicle
exceeds the
limitations set
out above.

Find out about:

Practical Compliance Guideline PCG 2018/3 Exempt car benefits and exempt
residual benefits: compliance approach to determining private use of
vehicles

Eligible vehicles
In preparing your FBT return for the FBT year ended 31 March 2017, you can
continue to use the lists of eligible and ineligible vehicles or the principles-based
approach.

The eligible and ineligible vehicles lists will be removed from this website after 21
May 2017. You can use the lists to prepare your 2017 FBT return, but for years
following you will need to assess whether the vehicles held meet the private use
exemption criteria based on the guidance provided on the principles-based
approach in Table 2 below.

Table 2: Eligible vehicles – principles-based approach

Vehicle type Requirements More information

Taxi Taxis qualify for the See subsection 8(2) and

work-related use 47(6) Fringe Benefits
exemption if they are Tax Assessment Act
owned or leased and 1986.
designed to carry a load
of less than one tonne
and fewer than nine
passengers.

Panel van – solid rigid- Panel vans qualify for See subsection 8(2) and

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bodied, non-articulated the work-related use 47(6) Fringe Benefits
car, smaller than a truck, exemption. Tax Assessment Act
without rear side 1986.
windows

Single cab ute Single cab utility trucks See subsection 8(2) and
qualify for the 47(6) Fringe Benefits
exemption. Tax Assessment Act
1986.

Dual cab ute – different Dual cabs qualify for the For an explanation on
from conventional goods work-related use how to work out if a dual
vehicles with extra seats exemption only if they cab is eligible for the
behind the driver and are not designed for the exemption, refer to MT
front passenger. They principal purpose of 2024 Fringe benefits
also share a common carrying passengers. tax: dual cab vehicles
chassis which can fit a eligibility for exemption
single or dual passenger where private use is
cab and alternate tray limited to certain work-
section related travel .

Four-wheel drive vehicle Four-wheel drive See TD 94/19 for

(other than utilities and vehicles qualify for the examples of factors to
dual cabs) work-related use consider when deciding
exemption if they are: whether a four-wheel
designed to carry a drive vehicle (other than
load of one tonne or a utility or dual cab) is
more, or designed for the
designed to carry principal purpose of
more than eight carrying passengers.
passengers, or These factors include:
not designed for the the appearance and
principal purpose of presentation of the
carrying passengers. vehicle
any relevant
promotional literature
the emphasis evident
in marketing
the vehicle's
specification
load carrying capacity
passenger carrying
capacity.

Modified vehicle Modified vehicles qualify See MT 2033 Fringe

for the work-related use benefits tax: application
exemption if, for the of sub-section 8(2)
entire FBT year when exemption to modified

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 the car is provided, a cars.
modification or alteration
permanently affects the
inherent design of the
vehicle (for example,
hearses).

Other road vehicle
Other road vehicles See subsection 8(2) and
qualify for the work- 47(6) Fringe Benefits
related used exemption Tax Assessment Act
if they are designed to 1986.
carry:
a load of one tonne or
more, or
more than eight
passengers.

See also:

Car fringe benefits

Residual fringe benefits

Load carrying capacity calculation

https://www.ato.gov.au/General/Fringe-benefits-tax-(FBT)/In-
detail/Exemptions-and-concessions/Fringe-Benefits-Tax---Exempt-Motor-
Vehicles/?page=3
Last modified: 04 Dec 2018
QC 21311
You can use the following formula to calculate the carrying capacity of a vehicle:

Maximum loaded vehicle weight (for example, gross vehicle weight – this would be
included on the compliance plate attached to a vehicle by the manufacturer or
importer).

Less:

Unladen vehicle weight (for example, basic kerb weight) – this is the weight of the
vehicle with a full capacity of lubricant, coolant and fuel together with spare wheel,
tools (including jack) and installed options. It does not include the weight of goods
or occupants.

A compliance plate is typically found fixed to a vehicle's engine bay, door pillar or

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footwell.

Record keeping requirements

https://www.ato.gov.au/General/Fringe-benefits-tax-(FBT)/In-
detail/Exemptions-and-concessions/Fringe-Benefits-Tax---Exempt-Motor-
Vehicles/?page=4
Last modified: 04 Dec 2018
QC 21311
You're not required to keep special records to be eligible for this exemption.
However, you must be able to demonstrate the use of the vehicle meets the
eligibility criteria at all times. This could be done by regularly comparing the opening
and closing odometer readings of the vehicle with the total distance you expect the
employee to travel between home and work during that particular period.

Alternatively, you may need more detailed records of the vehicle's usage during the
FBT year. This could be a valid log book, together with opening and closing
odometer readings.

See also:

Fringe benefits tax record keeping

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