ATO safe harbour for ‘work-horse vehicles’

Eligible commercial work vehicles are exempt from FBT where any private use is limited to either:

• ‘work-related travel’ of an employee (including home to work travel); and
• Any other private use by the employee that is minor, infrequent and irregular.

This exemption is often referred to as the ‘Ute exemption’.

A major problem met by employers in trying to apply this FBT exemption was that there was never previously any firm direction on what was meant by ‘minor, infrequent and irregular’ private use.

Now, the ATO has addressed some of the doubt regarding the application of this FBT exemption via the release of a ‘safe harbour’ for employers who provide eligible commercial vehicles for the private use of an employee.

Generally, under the ‘safe harbour’, when certain arrangements are meet under the ATO Practical Compliance Guidelines, employers are not required to keep records about the use of the vehicles to demonstrate that any private use is ‘minor, infrequent and irregular’.

Additionally, the ATO will not dedicate compliance resources to review whether the FBT exemption is available in relation to such arrangements.

Please contact our office if you would like further information regarding the Practical Compliance Guidelines.

Reference: NTAA Voice Dec 2018