Utilities & Fringe Benefit Tax

9th February 2018

Employers and tradies who operate company vehicles are being warned of a likely change in the ATO’s approach to fringe benefits tax.

Currently most employers have a view that all utes are FBT-free and the lack of audit activity by the Australian Taxation Office has reinforced this view.

Unfortunately under draft new guidelines, many employers may find themselves exposed to FBT on these vehicles.

In order to remain compliant and avoid unwanted tax bills, employers will need to introduce a major “cultural shift” among workers quickly.

Currently, work utes are exempt from FBT where they are used for minor, infrequent and irregular personal use.

If the ATO gets their way, that rule will effectively be scrapped in favour of an “all or nothing” test. The current approach would only apply to journeys that deviate from a normal route between home and work by less than 2 km, such as a school run, or picking up groceries on the way home.