Car Fringe Benefits Tax (FBT) is a tax on fringe benefits provided to employees, including company directors (even if no director fees are paid to that director). If a business owns a car and that car is available to an employee for their private use, that employee may be receiving a car fringe benefit. If the vehicle is not a car, the employee may be receiving a residual fringe benefit. Car FBT relates to:

  • a sedan or station wagon
  • any other goods-carrying vehicle with a carrying capacity of less than one tonne, such as a panel van or utility (including four-wheel drive vehicles)
  • any other passenger-carrying vehicle designed to carry fewer than nine passengers.

Private use
If a car is used or is available to be used for private purposes of an employee or their associates, it is taken to be available for private use. If a car is garaged at or near the employee’s private residence, even if it is for emergency and/or security reasons only, it is taken to be available for private use, regardless of whether or not they have permission to use the car privately. Generally, travel between home and work is private in nature, and therefore the use of a car in these circumstances is private.

Exempt car benefits
In some circumstances, the use of a car may be exempt from FBT. For example, an employee’s private use of a taxi, panel van, or utility designed to carry less than one tonne is exempt from FBT if its private use is limited to:

  • travel between home and work
  • incidental travel in the course of performing work-related travel
  • minor non-work-related travel, infrequent, and/or irregular travel (e.g. occasional use of the car to take rubbish to a waste centre).

The information provided in this blog is only a basic illustration of FBT on cars. FBT applications vary depending on the specific circumstances. For more information, please call us on 07-3286 2407.

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