Fringe benefit tax on specific categories of benefits: Motor vehicles
Keeping records on motor vehicles
To meet the requirements for fringe benefit tax on motor vehicles, or claim a general exemption or daily exemption on them, you must keep adequate records. These include:
- general records for any vehicle in relation to fringe benefit tax (including those for which you are claiming an exemption)
- records for any vehicle available for private use
- records for work-related vehicles (where you are claiming a full or partial general exemption)
- records for vehicles stored on the employer's premises
- records for vehicles for which you are claiming daily exemptions
- documentation to support a start time other than midnight for the commencement of the 24 hour period.
Vehicles available for private use
If you provide a vehicle that is available for private use (subject to fringe benefit tax), your records must:
- identify the motor vehicle available for private use
- support the market value or cost price that you are using for its taxable value
- include working papers, where you are claiming daily exemptions, showing how the liable days are calculated for each quarter, with supporting documentation for any exempt days
- include copies of any restriction on private use (usually a letter or notice)
- include working papers showing how the total of any employee contributions was calculated for each quarter, with supporting documentation.
Work-related vehicles
To claim a full or partial exemption for work-related vehicles, you must keep:
- a description of the vehicle to show it meets all four conditions to qualify as a work-related vehicle
- a copy of the letter or notice informing employees that private use is restricted to the terms required for a full exemption (condition 3), or to the days required for a partial exemption
- records of the quarterly checks conducted to ensure that the employee is using the vehicle for authorised use only.
Vehicles stored on the employer's premises
To claim the exemption for vehicles stored on the employer's premises, you must keep a copy of the written communication (usually a letter or notice) to employees in which you inform them of the restriction.
Daily exemptions
If you are claiming any daily exemptions, you must keep adequate records to support your claim.
One possible approach is to record every exemption for which a vehicle qualifies over its whole life. An easier alternative is to run a three-month test period to establish appropriate records, as follows.
- Schedule your test periods based on the type of FBT return you file.
- Keep full records for three months, recording every daily exemption for which a vehicle qualifies during that time.
- Calculate the number of exempt days for the quarter, taking into account the number of days in the quarter you use for the test period.
- Use the result to calculate your fringe benefit tax on that vehicle for a three-year application period.
- After three years, run another three-month test period.
| Type of filer | Scheduling of test period | Start of 3-year application |
|---|---|---|
| Quarterly | One full quarter | First day of that quarter |
| Annual | One full quarter in the year | 1 April |
| Income year | Any three consecutive months in the year | First day of the income year in which the test is conducted |
Date published: 14 Oct 2004
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