Private use of work vehicles: a commonly overlooked fringe benefit
Help your employer clients understand how personal use of a work vehicle may trigger FBT obligations.
If your clients provide employees with work vehicles, it’s essential to review how those vehicles are used and whether exemptions apply. Otherwise, they may be liable for fringe benefits tax (FBT).
Personal use of work vehicles is one of the most frequent — and often overlooked — FBT issues.
When does private use attract FBT?
FBT usually applies whenever a work vehicle is available for private use — even if the employee doesn’t actually drive it for personal reasons. Private use includes:
- Trips unrelated to work, such as camping or going to the beach
- School pick-ups and drop-offs, even if on the way to work
- Running personal errands, like shopping
- Carrying family or friends for non-work purposes
- Parking the vehicle at home (even for security reasons)
Some exemptions may apply depending on the vehicle type and the extent of private use.
Common FBT mistakes to avoid
- Treating private use as business use
- Assuming dual cab utes are automatically exempt — exemptions only apply if conditions are met and private use is restricted
- Misclassifying vehicle types
- Keeping inadequate records that don’t back up claims or FBT calculations
- Failing to report or pay on time