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FBT and the humble Aussie ute

Written by Peter Carter • Senior Accountant
Published on 18 Dec 2018

What is Fringe Benefit Tax and how is it applied?

Fringe Benefits Tax is a tax applied to employers who supply benefits to employees or their associates instead of salary or wages. It is applied at a tax rate of 48.5% on the grossed-up value of the benefit provided.

If you own a registered company in Australia and you are running a motor vehicle through this then that vehicle may be subject to Fringe Benefits Tax if it is made available for private use or garaged at an employee’s place.

 

Hang on, Fringe Benefit Tax can be applied to my ute?

Under the Fringe benefits Tax legislation, a ute capable of carrying 1 tonne or more is exempt may be exempt.

However, some of our most popular Ute’s aren’t capable of carrying a tonne and would, therefore, be subject to Fringe Benefit Tax.

A quick analysis of the ranger utes and their payloads shows varying load carrying capacities within the same range;

Model                                                  Payload

Ford Ranger wildtrak                      940kg manual/ 922kg automatic

Ford Ranger single cab                   1331kg manual/ 1313kg automatic

Ford Ranger Dual cab                     1009kg manual/ 991kg automatic

As you can see not all utes are capable of carrying a 1-tonne payload within the same range of vehicle.

For the Ford Ranger Wildtrak owners, a Fringe Benefit Tax liability would exist if any of your employees or associated persons were to use this vehicle privately.

 

My ute easily carries a tonne – does that make it Fringe Benefit Tax exempt?

Just when you thought you’d be safe by buying a ute capable of carrying a tonne and avoiding the Fringe Benefits Tax the ATO has another rule which you need to also pass. If you have a 1-tonne ute, the ATO may still be able to charge FBT on the vehicle if the vehicle isn’t predominantly used for work purposes. The FBT other benefit captures those vehicles that would be otherwise exempt such as the 1-tonne ute and deems it to be subject to Fringe Benefit Tax if it isn’t used predominately for work purposes.

 

How do I minimise the amount of Fringe Benefit Tax my ute is subject to?

If you are subject to the Fringe Benefit Tax on any vehicle you can keep a log book showing the work use of the vehicle and this can be used to reduce the amount of FBT the vehicle may be subject to. For a guide on this see my blog on Claiming car expenses in 2018.

Check out another recent blog in this category.

Peter is a Certified Practicing Accountant (CPA) and has completed an Advanced Diploma in Accounting and Bachelor of Commerce (Accounting and Finance Law). Peter has worked with Fitzpatrick Group since July 2002. Authour \u2022 Peter Carter

Senior Accountant, Fitzpatrick Group

Post Categories: Small Business | Tax Essentials

Interested in minimising your FBT liability?

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