FBT season is approaching: are your work vehicle arrangements up to date?

As fringe benefits tax season approaches, work vehicles remain one of the most common areas of confusion for business owners.

If your business owns or leases vehicles that are used by employees or directors, it is important to understand that fringe benefits tax may apply where there is private use. This continues to be an area of ATO focus, particularly where vehicles are held in companies or trusts and made available for personal use.

The rules can be more complex than many people expect. It is not simply a case of whether the vehicle is used for work. The real question is whether the vehicle is also available for private use, and whether any exemption genuinely applies.

Why this matters

The ATO pays close attention to motor vehicle benefits because they are common and often misunderstood. Errors usually arise where businesses assume a vehicle is automatically exempt, fail to keep proper records, or overlook private use by employees and directors.

Common problem areas include:

• failing to recognise that private use can trigger FBT

• assuming dual cab utes are automatically exempt

• not maintaining valid logbooks or supporting records

• not reviewing changes in vehicle use from year to year

• failing to lodge an FBT return where required

A point our clients should be aware of

For many of our clients, where vehicles are held in an entity, we already prepare FBT returns, or at a minimum, review the FBT implications as part of our year-end compliance process and make the necessary adjustments where required.

This means the existence of a vehicle in a company or trust does not automatically mean something has been missed or incorrectly reported. In many cases, the FBT position has already been considered.

However, that review is only as good as the information available to us. If the use of a vehicle has changed during the year, or if a new vehicle has been acquired and used privately, it is important that we are told so the correct treatment can be applied.

When issues can arise

FBT risk tends to arise where a vehicle is available for private use by an employee, director, or an associate, and the business either assumes there is no FBT consequence or does not keep adequate records to support its position.

This can include situations where:

• a company vehicle is taken home regularly

• a ute is used outside work-related travel

• an electric vehicle is purchased for an employee as part of a salary packaging arrangement, but no exempt fringe benefits have been reported

• a director or employee uses the vehicle on weekends or during leave

• there is no current logbook or usage record

• the business relies on assumptions rather than reviewing the facts

What you should do before FBT year end

As we approach FBT season, it is a good time to review whether anything has changed during the year.

Please let us know if:

• your business has acquired or sold any vehicles

• a vehicle has started being used by a different employee or director

• private use has increased or changed

• you are unsure whether an exemption still applies

• your logbooks or records are not up to date

Final thoughts

Motor vehicle FBT is an area where assumptions can lead to problems, particularly as the ATO continues to focus on compliance.

For our clients with vehicles in entities, this is already something we consider as part of our compliance and year-end review process. The key is ensuring we have complete and current information, so the treatment remains correct.

If your vehicle arrangements have changed during the year, or if you are unsure whether FBT may apply, please contact us so we can review your position.