ATO PROVIDES GUIDANCE ON EXEMPT CAR AND RESIDUAL BENEFITS
The ATO have released Practical Compliance Guideline PCG 2018/3 ‘’Exempt car benefits and exempt residual benefits: compliance approach to determining private use of vehicles’’.
The PCG has updated the criteria under which the private use of an exempt vehicle is considered minor and infrequent and therefore potentially exempt from FBT. Exempt vehicles include some utes, panel vans, dual cab and four-wheel drive vehicles.
Providing other criteria in the PCG are satisfied, an exempt vehicle’s use will be considered minor and infrequent if:
- Your employee uses the vehicle to travel between their home and their place of work and any diversion adds no more than two kilometres to the ordinary length of that trip, and
- For journeys undertaken for a wholly private purpose (other than travel between home and place of work), the employee does not use the vehicle to travel
- More than 1,000 kilometres in total, and
- A return journey that exceeds 200 kilometres
The guideline provides welcome clarity in relation to what the ATO regards as minor and infrequent when it comes to the private use of exempt vehicles.
