ATO Warning on Private Use of Work Vehicles and FBT
If your business provides employees with vehicles, you could be at risk of Fringe Benefits Tax (FBT) – even if the vehicle is rarely used for personal reasons. The ATO has issued a fresh reminder to employers: private use of work vehicles remains one of the most commonly overlooked fringe benefits.
When FBT Applies
FBT generally applies when a work vehicle is available for private use, regardless of whether it’s actually used privately.
Examples of private use include:
- School drop-offs or personal errands on the way to work;
- Transporting family or friends; or
- Simply parking the vehicle at home overnight – even if “for security reasons”.
If the vehicle can be used for personal purposes outside work hours, it’s considered a fringe benefit, and FBT may apply.
Common Mistakes
The ATO regularly sees employers making the following errors:
- Treating private use as business use;
- Assuming dual cab utes are automatically exempt (they’re not);
- Misclassifying vehicles that don’t meet the criteria for exemption;
- Keeping inadequate records to support business use claims; and
- Failing to lodge or pay FBT on time.
Exemptions and Record-Keeping
Some vehicles may qualify for exemptions if private use is minor, infrequent and irregular, or if they meet the definition of a “commercial vehicle” (for example, certain utes or panel vans used strictly for work).
To support exemption claims, businesses should maintain logbooks, odometer readings, and clear policies outlining permitted use.
Staying Compliant
If you’re unsure whether your work vehicle use is exempt, don’t assume – check the vehicle type, usage records, and private use patterns. Accurate documentation and advice can prevent unexpected FBT bills and protect your business in the event of an ATO review.
Simmons Livingstone can help your business assess vehicle usage, identify potential FBT liabilities, and implement record-keeping systems to maintain compliance. Contact us today on 1800 618 800 or email admin@simmonslivingstone.com.au to arrange an FBT review or advice session.
