Fringe benefit tax on specific categories of benefits: Motor vehicles
General exemptions for motor vehicles
General exemptions apply to:
- Work-related vehicles not available for general private use
- Work-related vehicles with limited private use (partial exemption)
- Vehicles stored on the employer's premises
- Vehicles over 3,500 kilograms.
Daily exemptions may apply to vehicles that do not qualify for these general exemptions (for example, where they are otherwise available for private use).
Work-related vehicles not available for general private use
Employers are exempted from fringe benefit tax for motor vehicles that:
- employees or shareholders store at home and
- employees or shareholders may not use for general private purposes and
- meet all four conditions (as listed below) to qualify as a "work-related vehicle" for FBT purposes.
1. The principal design of the vehicle cannot be for carrying passengers. Qualifying vehicles include:
- utes, including extra cabs and double cabs
- light pick-up trucks
- vehicles with rear doors that are permanently without rear seats (for example, vans, station-wagons, hatchbacks, panel vans, four-wheel drives) or have rear seats that are welded down or made unusable because of a permanent fixture (for example, shelving) that covers the entire seat area
- taxis, including station-wagons and sedans (taxis are the only sedans that qualify for this exemption)
- minibuses, i.e. vans with three or more rows of permanent (not collapsible) seats, where each row is capable of carrying at least two adults.
No sedans except taxis qualify for a general exemption. However, some sedans may qualify for daily exemptions.
2. The exterior of the vehicle must permanently and prominently display:
- the name of the employer, or
- the business logo, acronym or other identification.
It is not acceptable to have magnetic signs, removable signs or signwriting on a removable part (for example, spare wheel cover) of the vehicle.
3. As the employer, you must notify employees in writing that the vehicle is available only for these two forms of private use:
- travel between home and work
- travel incidental to business travel (for example, passing by the bank on the way home from work).
We recommend that you give employees a separate letter explaining this restriction, rather than including it as one clause in an employment contract.
4. As the employer, you must conduct and record checks to ensure that employees are following this restriction. These checks:
- must be conducted at least quarterly on each vehicle for which you are claiming this exemption
- can take any form you choose provided they show the restriction is being followed, for example, physically checking the storage of the vehicles or checking petrol purchases and logbooks
- involving your employees in the checks could serve to remind them about the restrictions on private use.
See also the Keeping records on motor vehicles page on this website for the record keeping required if you wish to claim this exemption.
Work-related vehicles with limited private use (partial exemption)
You may have a partial exemption from fringe benefit tax for a work-related vehicle that:
- meets all four conditions to qualify as a work-related vehicle for FBT purposes and
- is not available for private use most of the week and
- is available for private use on certain days (for example, weekends and statutory holidays).
In this case, you pay fringe benefit tax on the vehicle for the days when private use is allowed in each quarter. You must specify which days it is available for private use. For example, a motor vehicle that is available for use in "any two days of the week" is subject to full fringe benefit tax because it remains available for private use on any day.
This partial exemption is particularly useful for employees who are on call and need their vehicles with them for emergency callouts (when a daily exemption applies).
See also the Keeping records on motor vehicles page on this website for information on the record keeping required if you wish to claim this partial exemption.
Vehicles stored on the employer's premises
A motor vehicle is not subject to fringe benefit tax if it is stored:
- on the business premises (that is, the vehicle is not available for private use) or
- at a company shareholder's home that is also the company's premises and there is no private use of the vehicle. If this home is a secondary place of business, there must be a private use restriction to qualify for this exemption, and the company must show that the vehicle is not available for private use.
See also the Keeping records on motor vehicles page on this website on the record keeping required if you wish to claim this exemption.
Vehicles over 3,500 kilograms
Vehicles with a gross laden weight of more than 3,500 kilograms are not subject to fringe benefit tax. This exemption includes larger trucks and buses.
Date published: 14 Oct 2004
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