Changes to FBT rules could make weekend or holiday company car use a big ‘no no’

Plans by the ATO to ramp up its compliance checks on company cars being used for private use, could force companies to remove cars from their salary packaging benefits. The good news is that the ATO has relaxed guidance on private use of salary packaging benefits, including utes, by clarifying what minor and infrequent and irregular use of company cars means.

From the start of the 2019 fringe benefits tax (FBT) year, the new guidance allows employees to use their car up to 1000 kilometres for private travel each year, provided that no single trip exceeds 200 kilometres.  Given that trips longer than this could cop an FBT charge of 20 percent on the cost of the car, holiday or even weekend use of the company car could become a thing of the past.

While sedans and four wheel drives provided by the boss – including commuting to and from work – are a fringe benefit (and as such incur tax), utes that meet certain criteria are exempt and can be provided as a tax-free perk.

As a result of the ATO’s renewed interest in private vehicle use – including attending sporting events and recording licence plate numbers – employers now have greater interest in limiting the private use of cars by their staff. The message to those with a company car is better understand the basis on which the boss cops a greater tax bill or in a worst case scenario, risk having the company car taken away.