Myths About Utes and FBT
There are a lot of myths around Utes and FBT, some of which may be spreading by “mates” at the bar, or during a smoko. Not all the myths are true, let’s look at some of them here:
Is my ute automatically exempt from FBT?
No. It is important to note that a vehicle that does not satisfy the definition of a ‘car’ such as a ute is not automatically exempt from FBT.
When is the private use of my car exempt from FBT?
The private use of a motor vehicle is exempt from FBT if all the following conditions are satisfied:
- the vehicle is a panel van, utility (ute) or other commercial vehicle (that is, one not designed principally to carry passengers) and generally has a carrying capacity of greater than one tonne
- the employee’s private use of such a vehicle is limited to
- travel between home and work
- travel that is incidental to travel in the course of duties of employment
- non-work related use that is minor, infrequent and irregular (for example, occasional use of the vehicle to remove domestic rubbish).
What is minor, infrequent and irregular use for FBT purposes?
The ATO have recently releases a Practical Compliance Guideline PCG 2018/3 that provides more guidance on minor, infrequent and irregular use as follows:
- the employee uses the vehicle to travel between their home and their place of work, and any diversion adds no more than two kilometres to the ordinary length of that trip; and
- for journeys undertaken for a wholly private purpose (other than travel between home and a place of work), the employee does not use the vehicle to travel more than 1,000 kilometres in total for the FBT year or more than 200 kilometres for a return journey.
How do I prove that my car had minor, infrequent and irregular use?
- the odometer reading at 31 March
- confirm if exemption conditions apply
- confirm the total number of private kilometres travelled that are not
If you would like more information or would like a template for the declaration, please call our office.