FBT & Tools of Trade Vehicles

The article below published in WA Today is a timely reminder to our clients to have their FBT affairs in order prior the end of the FBT year on 31 March 2016.

If they are providing their employees with a Tools of Trade Vehicle, they should confirm their  employees are only using them to and from work, and/or Private travel which is minor, infrequent and irregular.

A Tool of Trade Vehicle is considered a taxi, panel van, utility or other commercial vehicle (that is, one not designed principally to carry passengers).

We recommend the relevant employees complete and sign a “FBT Tool of Trade Vehicles Declaration” form – FBT Tool of Trade Vehicles Declaration

WA Today Article:

There’s a rumour swirling from the Australian Taxation Office that its employees like to go to weekend footy – not to watch the game but the cars parking outside the ground.

Utes have soared in popularity in the past decade. In mid-2009 the Toyota Hilux went past the Holden Commodore to become the nation’s best-selling vehicle and has been in the top-selling list ever since.

Meanwhile, the Commodore has slipped to No. 15 and its rival Ford Falcon, which was fifth-best-selling car when Hilux claimed No. 1 spot, has disappeared from the list altogether and will cease production from October 2016.

Unlike regular cars – and this is where the taxman comes in and the talk of their watchful eyes at the football – utes are exempt from fringe benefit tax for minor private use, including travelling to and from work and irregular use such as dumping domestic rubbish at the tip.

Combine that with utes becoming more SUV-like and there is more bang for buck from a taxation perspective, compared with a Falcon or Commodore, which will cease production from 2017.

But there’s a catch. Elizabeth Lucas, a partner at accounting firm Grant Thornton, said if a ute was found to be used heavily for private use the Tax Office could charge fringe benefit tax and other penalties.

“There is a rumour that the ATO goes to the footy at the weekend and checks the number plates of all the utes because it is a giveaway that they are being used for private use,” Ms Lucas said.

An ATO spokesman said the office was focusing on “unusually high work-related expense claims, including work travel across all industries and occupations”, and was using a “much wider approach than in previous years”.

But the spokesman said “tax officers do not attend football matches for the purposes of compliance activity”.

“We use contemporary techniques using sophisticated analytics and data to scrutinise all claims,” he said.

“The ATO’s ability to identify and investigate claims that differ from the norm is increasing at a rapid rate due to improvements in technology and the use of data.”

Ms Lucas said such methods that had proved successful included cross-checking vehicles with VicRoads’ registration data base.

She encouraged her clients to get their employees to fill out declarations, “or if they’re really worried have the employees’ fill out log books”.

The latest sales figures from the Federal Chamber of Automotive Industries show the Ford Ranger was Australia’s third-best-selling vehicle, behind the Mazda 3 and Toyota Corolla.

The Toyota Hilux was the fourth-best-selling vehicle, while Nissan Navara rounded off the top 10. Mitsubishi Triton was ranked 17th.

And the popularity of workhorse vehicles isn’t a phenomenon confined to Australia. In the United States, opulently optioned pick-up trucks have become the nation’s top-selling luxury cars, Forbes says.

More detailed information regarding the FBT exemption of Tool of Trade Vehicles can be found at the ATO website.



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