The ATO has issued employer guidance regarding how to determine an employee's private use of a vehicle for the purposes of the car-related FBT exemptions.
Draft Practical Compliance Guideline PCG 2017/D14 is the ATO's response to feedback that the application of the car exemptions is a compliance burden for employers and requires an overly detailed understanding of each vehicle's use. The draft guideline has been issued to provide more certainty and transparency about the circumstances in which the ATO will not apply compliance resources to determine if private use of a vehicle meets the car-related FBT exemptions.
Eligible employers who rely on the guideline do not need to keep records to prove that an employee's private use of a vehicle is minor, infrequent and irregular, and the ATO will not devote compliance resources to reviewing the employers' access to car-related exemptions for that employee.
An employer can rely on the guideline if:
- the employer provides an eligible vehicle to an employee for performance of their work duties;
- the employer takes all reasonable steps to limit private use of the vehicle and has measures in place to monitor such use;
- the vehicle has no non-business accessories;
- when the vehicle is acquired, its GST-inclusive value is under the luxury car tax threshold;
- the vehicle is not provided as part of a salary packaging arrangement, and the employee cannot elect to receive additional remuneration in lieu of using the vehicle; and
- the employee uses the vehicle to travel between home and work, and
- any diversion adds no more than 2 km to the ordinary length of that trip;
- no more than 750 km of travel in total for each FBT year for multiple journeys is for a wholly private purpose; and
- no single, return journey for a wholly private purpose exceeds 200 km.
Employers will need to assess their eligibility to rely on the guideline on a yearly basis.
Examples included in the guideline involve:
- incidental travel (regularly stopping at a newsagent) and wholly private travel (taking a relative to school 10 times during the FBT year) – the employer can rely on the guideline;
- travel to attend seasonal weekly football training, which adds more than 2 km to the journey from home to work – the employer cannot rely on the guideline;
- an employee who travels a total of 20,000 km and whose private use of the vehicle involves taking domestic rubbish to a tip (100 km return trip) and moving house three times (200 km in total) – the employer can rely on the guideline; and
- private travel, including a single return trip of 300 km – the employer cannot rely on the guideline.
When it is finalised, the guideline will apply to car and residual benefits provided from the 2017-18 FBT year, ie from 1 April 2017.