As an employer, you have a legal obligation to pay FBT on any car that you provide to your employees for private use – that said, there a couple of exceptions to this rule, so let’s explore them in more detail:
Limited Private Use
Regardless of the type of vehicle, you can claim an exemption if your employees’ private use of the car is limited, including:
- Commuting to and from work
- Travel related to work
- Very minor and irregular private use
Keep in mind, though, that the following conditions need to be met in order for this exemption to apply:
- You provided the employee this car primarily for their work duties
- The vehicle isn’t part of a salary sacrifice arrangement
- You can’t go further than 2km each time for any errands or diversions made to or from work
- You can’t privately travel more than 1,000 km each FBT year
- You have a policy in place that limits private use of the vehicle that your employees agree to
Exemption for Electric Vehicles
If you own an electric vehicle, you can be exempt from paying FBT providing that:
- The car was owned and used post the 1st of July 2022
- Is a low-emissions vehicle
- Luxury tax has never been paid on the vehicle
Exemption for PHEVs
The same applies here as for all other electric vehicles but from the 1st of April 2025 only the fully electric ones are exempt. That said, any PHEVs purchased prior to this date under a binding agreement that end after then will still be exempt until the agreement is finished.
Exemption for Regular Vehicles
As for non-electric vehicles, this generally includes:
- Both single and dual cab utes
- Goods vans
- Taxis
- Panel vans
- 4-wheel drives
- Modified vehicles – hearses, for instance
If you need to calculate the carrying capacity of your ute, you do this by taking the ‘gross vehicle weight’ (which you get from the compliance plate) and subtracting the ‘basic kerb weight’ (this includes things like fluids, fuel, and accessories).
Keep in mind that the vehicle absolutely has to be used principally for work purposes – private use needs to be very limited and it’s your responsibility as an employer to show evidence for this in case the ATO asks for it.
Models that are Exempt
EVs
- Lexus UX 300e
- MG4
- Kia EV6
- Volvo C40 Recharge
- Fiat 500e
- Mini Electric
- Peugeot e2008
- Nissan Leaf
- Mercedes EQA 250
- BMW iX 1 / 2 / 3
- Hyundai Ioniq 5 & 6
- Ford Mustang Mach-E
- BYD Dolphin
- Tesla Models 3 & 4
PHEVs (Until The 1st of April 2025)
- Kia Sorento PHEV
- Mitsubishi Outlander PHEV
- Peugeot 308 / 508 PHEV
- Ford Escape PHEV
- Alfa Romeo Tonale PHEV
Non EVs
- Isuzu D-Max
- Nissan Navara BT50
- Ford Ranger
- Mazda BT-50
- Iveco Daily
- Toyota Hilux
Learn How to Abide by FBT laws with Advisory One
Struggling to understand whether or not your vehicle is exempt from fringe benefits tax? Allow our team of chartered accountants to ensure you’re within the law and getting the proper tax deductions – contact us at 02 6324 5888 to find out more.
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