Are You Using Your Dual-Cab for Private Use?

The ATO have cracked down on Dual-Cab Utes being used for personal use by making changes to the Fridge Benefit Tax exemptions that are available.

Previously, if you own a vehicle that is not principally designed to carry passengers there were Fringe Benefit Tax exemptions available. These are aimed at single cab utes and vans, however, many people would purchase dual-cab utes because of the overall improvement and usability of the style of vehicle. As of Feb 9 ’18 everything changed.

Many business owners are purchasing these vehicles and registering them for business use. They are using them for holidays, weekend trips, towing boats & caravans and other private purposes to avoid fringe benefit tax.

Australians bought 236,609 light commercial vehicles in 2017, registering 144,109 for business use – more than double the number bought for private purposes. That number has increased steadily in recent years, up from 120,953 registered for business use in 2012 and 114,655 in 2007. The ATO have flagged this sudden rise in sales with the likes of new Ford Ranger and Toyota HiLux being top sellers in Australia. These dual-cab utes generally cost more than $50,000 can bring a nasty surprise if a log book is not completed and are found to have breached the exempt vehicle guidelines. Without a log book the annual FBT liability may be around or in excess of $10,000.

The ATO’s guidelines allow “minor, infrequent and irregular” private use. This includes travelling to and from work. It does not however extend to trips to the beach, the supermarket, on holidays, amongst other things.

“The ATO admits there is “inconsistency as to methods used by employers to ensure compliance with the car-related exemptions”, or in other words, the government is concerned businesses aren’t doing enough to make sure staff don’t break the rules.”

New rules under consideration by the ATO allow up to 750 kilometres of private travel in company cars each year, as long as no single return journey exceeds 200 kilometres. Employees can make small diversions between home and work, as long as the detour adds less than two kilometres to their total trip.

Employers who use commercial vehicles in their business, should be aware of the ATO’s attention to the usage of such vehicles and new rules in place.

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