Utes and FBT Exemption $$

[LSX-438]

This topic has come up elsewhere but I need clarification.

When Joe Bloggs office worker packages a car (salary sacrafice), there is usually an FBT hit linked to the distance travelled.

The theory is :

Higher number of k's = higher implied business use = less FBT.

However some who package their car do not actually use it for business purposes, and may not even drive it to work. I believe there is provision for packaging a car for your spouse too.

FBT Exempt?

Apparently certain cars are FBT exempt (eg. a Ute).

There is some confusion about what FBT Exempt means. Some say it relates to vehicle payload (ie must be 1-tonner) whereas others say any Ute is ok. There is the notion that any car designed to carry a load versus carrying passengers is exempt. Someone here has mentioned their Maloo R8 is exempt.

I have spoken with my salary packaging people who rolled out the "1-tonne" rule straight away.. In addition they stipulate you can only claim FBT exemption (for Utes) where:

the utility is used for primarily work purposes, where you are a tradesman who requires to carry equipment with him in the course of fulfilling duties etc. etc.

So I have 2 questions:

1. What is the definition of an FBT exempt vehicle

2. Can Joe Bloggs office worker (not a tradesman) take advantage of FBT exempt vehicle?

I intend on contacting the Tax office and/or an accountant, but I thought someone here may have recently determined (definitive) answers, perhaps by talking to the tax office. This really needs to be answered with certainty because there is a potentially huge benefit available.

thanks

[MalooR8]

Doesn't it annoy you when they do that with the 1 tonne thing.....

If you go here (http://law.ato.gov.au/atolaw/index.htm)

It won't let me link directly but you need Tax ruling MT2024 and its addendum MT2024A

The addendum says that a series III V8 Holden ute is exempt, Latest version has a larger ute tray and no larger payload. Wave this at em....


The tax Ruling MT2024 in the first paragraph states:

Generally speaking, a liability for FBT arises where an employer's motor vehicle is used by an employee for private purposes or is available for the private use of an employee. However, under sub-sections 8(2) and 47(6) of the Fringe Benefits Tax Assessment Act ("the Act"), a liability for FBT will not arise where the private use of certain vehicles by employees during a particular year of tax is limited to certain work-related travel. Work-related travel is defined in sub-section 136(1) of the Act to be travel between the employee's residence and place of employment or other place at which employment duties are performed and any travel that is incidental to travel in the course of performing duties of employment.


So if you drive to work and back its ok. I emailed the tax office for a ruling and was told this is a very common question, so much so they don't do rulings on it, its just OK. I've the persons details at home if you need to contact them. If you talk to an accountant talk to one who deals with tradesmen the two I chatted to (ones my wife) wouldn't know a tradesman apart from paying them to do work at home, they had no clue on the rulings, however their now much enlightened.

[LSX-438]

thanks MalooR8 - that is excellent.

If you can provide those details it would be awsome.

So you are saying Joe Bloggs office worker can definitely package a utility and get FBT exempt benefits?

[MalooR8]

try these links (got em working):

here (http://law.ato.gov.au/atolaw/view.htm?basic=+mt%202024&&docid=MTR/MT2024A/NAT/ATO/00001)


and here (http://law.ato.gov.au/atolaw/view.htm?basic=+mt%202024&&docid=MTR/MT2024/NAT/ATO/00001)

You've definately no problems with the 1 tonne ruling, although Holdens got problems with the cross 4 if its not 1 tonne, Your only hurdle is getting the beancounters at your work to accept it. Worth pursuing though

[LSX-438]

thanks for that.

fwiw, this is what my packaging people said of the matter:


There are two separate issues to look into.

1. Unless the utility is used for primarily work purposes, it is excluded from being FBT exempt. In your case, unless you are a tradesman who requires to carry his equipment with him in the course of fulfilling his duties, or say someone working in production within the media industry who needs to carry around amplifiers, speakers etc. in line of his work, your utility will not be FBT exempt.

2. Once the above has been resolved, we can proceed to ascertain the treatment of the utility either as a car fringe benefit (if less than one tonne), or a residual benefit (if greater than 1 tonne).

Anyway - If you still have the contact details of the tax office person, that would be great.

[MalooR8]

you have mail

[LSX-438]

thanks for all your help on this MalooR8, i will let you know the outcome.

[delftssute]

So for the dummies, does that mean that if you package a ute (<1 ton ) on a novated lease should you pay the reduced rate based on KM's travelled or pay no FBT at all.

the rates based on KM's travelled are as follows:

The formula for FBT per year is: (Capital cost of vehicle) x (percentage determined by kms achieved) x .485 x 2.1292.
The percentage is determined by the number of kilometres driven. Under 15,000 = 26%, between 15,000 and 24,999 = 20%, between 25,000 and 40,000km = 11%, over 40,000km = 7%.
FBT is not payable on lease payments or running costs

[sandmanls1]

couple of people here have got Rodeo 4wd dual cab v6 utes over Commodores even though intial purchase price is more, costs less over the time of the vehicle due to being fbt exempt..

[LSX-438]

Originally posted by sandmanls1
couple of people here have got Rodeo 4wd dual cab v6 utes over Commodores even though intial purchase price is more, costs less over the time of the vehicle due to being fbt exempt..

If they are claiming their exemption under ruling MT2024 then they may have made a huge compromise for nothing.

The addendum to that ruling lists all elegible (FBT Exempt) vehicles.. the V8 Commodore Ute is one of them.

[LSX-438]

i've fired off the questions to the ATO.

My packaging people have indicated that probably still wont do it; i wonder if they are really allowed to refuse.

[AndyP]

I always thought dual cab werent FBT exempt? They never used to be...

[sandmanls1]

oops meant single anyp dunno where got dual from...

[LSX-438]

Originally posted by AndyP
I always thought dual cab werent FBT exempt? They never used to be...

me too... it seems there are many misconceptions when it comes to this FBT exempt thing. Problems is even the accountants dont know the law properly.

[Brendan]

Originally posted by forrestd
me too... it seems there are many misconceptions when it comes to this FBT exempt thing. Problems is even the accountants dont know the law properly.

Problem is the Australian tax system is unwieldy and overly complicated.

Needs to be simplified, piss all the deductions and claims off, top tax rate of 30-33% - I'd be a hell of a lot happier.

Remember at the end of the year, that big cheque you get back from the ATO is the very reason you are paying nearly half your cash to the ATO during the year.

[LSX-438]

my problem is the salary packaging people, HR and accountants err on the side of caution - when you raise anything out of the ordinary - they pick the path of least resistance (like most i guess).

with this fbt thing, if i were to believe these gate keepers, i would be out of pocket by about $20k cash over the course of the lease.

[MalooR8]

If you can get a personal ruling from the ATO they can't really argue about it, you've just taken any liability from both them personally and the company you work for.

Their just covering their arse and who can blame them for that.

[LSX-438]

fair call. this is one of thse things you want to tell the world about (fbt exemption) but you fear if too many people take advantage of it, they will put a stop to it.

my packaging people are sticking to their guns.. they say i must be a 'tradesman' (who carries around a bunch of equipment) to lease one of these cars... but the spirit of the exemption relates to cars that are 'not designed to carry passengers' (therefore private use is deemed to be of limited value). i dont see how being a tradesman really has anything relevance as anyone leasing one of these cars is subjected to the same limited value.

[MalooR8]

would give you the poos though wouldn't it, its a lot of money to save/payout.

I hate to tell you but my accountant wifes last company car was a Hilux 4x4 SR5 dual cab that she paid no FBT on, only thing she carts to the office and back is a brief case.

Can you package through prosperion or such or do you have to use the inhouse people? others may be a little more enlightened.

Just wait and see what the ATO say about it.

[LSX-438]

yeah i'll wait for the ATO.

if the response is favourable and the packaging people still refuse, i will try to go around them.

our packaging is outsourced to a company called 'PaySelect'.

[LSX-438]

btw MalooR8,

when this works out, I will be sending you a case of your favourite beverage.

[delftssute]

I would also be very interested in hearing the result, as at the moment my SS is leased and I paid over $4000- last year in FBT and have two years to go. Really would cut the cost of the lease if $4000- p.a. was taken out of my repayments.
I have read the info on the links, but any news would be appreciated. Thanks delftssute

[K E R B]

... for the un-enlightened and lease novices ...

How much money does this FBT ( ... I assume Fringe Benifit Tax ... ) save you on average ???

:1peek:

[LSX-438]

if there is no FBT liability you get the fully benefit of paying it all pre-tax... which means if you earn top marginal rate ($60k+) you will effectively be paying half.

[LSX-438]

I today received a written response from the ATO on this FBT exemption thing.

I asked them to confirm that a regular office worker in the finance industry can claim the FBT exemption for these cars (under the private use conditions of course) under a novated lease arrangement.

Guess what?... it was a bit fat..

YES!

In writing, signed by the deputy commissioner of taxation.

I have since told the salary packaging people, who previously told me I would have to be a 'tradesman' carrying around a bunch of tools in the tray in order to claim the exemption.

They were wrong.

If I took their advice I would be out of pocket $18k over lease term.

MalooR8, I owe you a case of your favourite ale, at least!.

[SS Enforcer]

Hehe the only reason i got a ute instead of a sedan was the tax position.

I paid cash for it and can depreciate 17.5% pa off the top book price on a SS, as well as claim 100% of all cost incurred throughout the year. I just recieved 13k from ato and thats after paying a fair whack in CGT for the year.

But how do I claim the cost of an Edit .. would be a bit cheeky wouldnt it :flip2:

:driving:

[MIC33R]

Good to hear forrestd. It certainly makes the utes look more and more like good buys.

[LSX-438]

if you needed something more family friendly you could go with say a 4x4 Rodeo dual cab, it's also on the list. Personally i dont get that bit (as the implied fringe benefit / exemption is related to passenger carrying ability). Bit of a loop hole i guess.

[MIC33R]

As nice as a Rodeo would be, I need a little bit more grunt. Besides, I'm in no rush to start a family, so a ute might be a goer. My R33 is getting on a bit now (it's a 93), so something new would be good. I'm also considering a Toyota Chaser which has just become eligible for importation in the last couple of weeks, although it is a bit more of a family car.

[LSX-438]

my thoughts too (about the Rodeo)... it would make a lot of sense for me (I have kids) but next to zero fun factor.

[motomk]

Our work also hit us with the 1 tonne thing!

To put all this in laymans terms...You can novate lease, salary sacrifice an SS ute as long as you use it occasionally to drive to work with and pay ZERO FBT???



Am I reading this correctly or is this too good to be true??

Forrestd...get that man validated quick if this is the case!!!!!!:D

I will also move this topic into technical as it has some very interesting information in it and would be a shame to see it deleted.


motomk

[sandmanls1]

any different FBT exemptions / tax breaks if you have your own company?

[MalooR8]

Excellent result Forrestd, glad I could help.

[LSX-438]

motomk: short answer is yes. However you are constained by the private use conditions, meaning your useage is supposed to be limited to "work related" travel (which includes travel to and from work) and other "incidental" travel (going for lunch, taking rubbish to the tip). How they police/prove it I dont know.

ZERO FBT... a $600 pm lease effectively costs you $300.

[SS Enforcer]

Originally posted by motomk
Our work also hit us with the 1 tonne thing!



motomk


The Ford dealer at Rockdale gave me a transcript of the ATO ruling stating that the utes are FBT exempt and doesn't need to be 1 tonne rated.


The proviso being that it was being used mainly for work purposes.

My super safe accountant agreed that this was acceptable and gave me permission to get one :dance:


PS Nearly bought a BA ...... glad i didn't :driving:

[loser_bob]

it will be interesting to find out if the Crewman Utes (crew cab commodore ute 2wd) will be eligable under this scheme. because you can get them as an SS. :thumbsup:

[LSX-438]

another question: does anyone know if there is any point packaging running costs for these 'commercial' vehicles versus a regular car? Any similar advantage?

[MalooR8]

But how do I claim the cost of an Edit .. would be a bit cheeky wouldnt it

I wouldn't think so, I mean if the receipt from whomever did the work stated it was a service and tune (inc. parts). Well it is a tune isn't it ;)


Hey Forrestd, just package it up like a normal car, so you pay for everything in pre-tax dollars.

[LSX-438]

are you saying packaging running costs, petrol card, insurance etc is FBT free too... if so.. maybe there is a god after all.

[LSX-438]

for those who want to show their packaging people, here is the email I sent the ATO

> -----Original Message-----
> Sent: Thursday, 19 June 2003 10:13 AM
> To: 'BTRadvice@ATO.gov.au'
> Subject: FBT exempt vehicles
>
>
> Taxation Ruling MT2024 (and addendum MT2024A) lists specifc vehicles as
FBT exempt where private use is limited to work related travel (including
travel to and from work).
>
> My questions are:
>
> Is there an updated list of such vehicles?
>
> Is there any reason why a regular employee cannot undertake a novated
lease for such a vehicle and obtain the FBT exemption, assuming they follow
the private use requirements?
>
> thanks
>
> Duncan
>

And here is the response:

http://members.optusnet.com.au/~duncanforrest/fbt0001.JPG
http://members.optusnet.com.au/~duncanforrest/fbt0003.JPG
http://members.optusnet.com.au/~duncanforrest/fbt0004.JPG

A list of eligble and ineligible cars can be found here:

http://law.ato.gov.au/atolaw/view.htm?basic=+mt%202024&&docid=MTR/MT2024A/NAT/ATO/00001

[MalooR8]

are you saying packaging running costs, petrol card, insurance etc is FBT free too... if so.

Most definately, if the cars FBT exempt no FBT can be charged on anything relating to the car.:D

[Firebird 5.7L]

Well done guys, great info! Motomk, do you know whether or not this is possible through CBA novated leases? Should be I guess..

[LSX-438]

lease provider should not matter.

btw spoke with CBA today, their rate is 6.95%

[Firebird 5.7L]

Thanks. I'm a newbie to novated leases. How are the FBT payments made, is it included with the lease payments or paid at the end of the year with your tax return?

[LSX-438]

Well if you're buying a Ute.. it is probably zero FBT. But otherwise, I think you make an estimate (of the number of K's you will do during a year) and your payroll people should work out the gross cost (pre-tax) each month/weeks or whatever, taking into account the FBT calcs. Adjustments are made at the end of the year depending on the actual number of K's travelled.

I might be wrong here, normally I just get a finance lease (non salary packaged). Of course, this means your payroll people have an admin overhead. If you can't get payroll people to do this, you can perhaps use a specialist packaging company like prosperion.

[Firebird 5.7L]

The company I work for uses CBA for novated leases. From memory I think motomk works for the same company as me?

I'm going to dig up all the info at work on Monday, and talk to the HR people. If I can get zero FBT looks like my next daily driver is going to be a ute!

[LSX-438]

go for it.. be prepared for your salary/HR people to scoff in response to the zero FBT idea. it just sounds too good to be true. be persistent and stick to the "work related" rule (driving to and from work is ok). point them to the MT2024 tax ruling.

[Firebird 5.7L]

Yeah I'm sure they'll laugh out loud when I mention zero FBT. I'll go in there armed with the tax ruling etc and see what happens...

[Chappo]

I tried this with Smart Salary, they don't want to know about it. :mad:

[LSX-438]

Originally posted by Chappo
I tried this with Smart Salary, they don't want to know about it. :mad:

that seems to be a common problem.

You have to push the issue; you are entitled, provided you follow the clearly defined rules.

[Chappo]

Originally posted by forrestd
that seems to be a common problem.

You have to push the issue; you are entitled, provided you follow the clearly defined rules.

Yeah, but that's the issue for me at the moment, the rules don't seem to be clearly defined (well not to me anyway :confused: ). As far as I can work out you must use the ute primarily for work, just driving to and from work doesn't cut it.

[Firebird 5.7L]

I spoke to CFL about it this morning, they dont want to know. Followed up with an email and referenced the tax rulings. Got a call back this arvo, still too hard for them and they have forwarded my letter to our corporate taxation dept.

If the response is unfavourable I'll write another letter and go for a personal ruling from the ATO as well.

[LSX-438]

Originally posted by Chappo
Yeah, but that's the issue for me at the moment, the rules don't seem to be clearly defined (well not to me anyway :confused: ). As far as I can work out you must use the ute primarily for work, just driving to and from work doesn't cut it.

have a think about a normal novated lease.

higher number of k's travelled implies a higher business use thus reduced FBT rate. Now do any of these people use the cars for business use?? No. The whole system is a scam to begin with. Refer your people to MT2024 and ask them why you can't do it.

[LSX-438]

The Australian Tax Institute has a service called 'TAXLINE'. It is a research service which answers specific tax related questions.

I have sent a request in order to (hopefully) resolve this with some certainty.

[Firebird 5.7L]

Its great to have such an open and frank discussion about this. Forrestd, it will be good to hear the general reply you get from the ATI. I contacted the ATO via email this afternoon with a specific inquiry related to my own circumstances.

I reckon I can see myself in a red-hot ute with an LS1 under the hood - yeah yeah :thumbsup: ;)

[LSX-438]

Originally posted by forrestd
The Australian Tax Institute has a service called 'TAXLINE'. It is a research service which answers specific tax related questions.

I have sent a request in order to (hopefully) resolve this with some certainty.

Well the 'TAXLINE' people never got back to me.

I called the ATO, and they never got back to me either, slackos.

In my case, we eventually got our resident tax consultant to sanction the (FBT exempt) deal, after reading the letter from the ATO. On the letter, it says nobody will be penalised for relying n the advice therein.

My ute is being shipped up from Vic now (bought it from doncaster holden).

[LSX-438]

Originally posted by Firebird 5.7L
I spoke to CFL about it this morning, they dont want to know. Followed up with an email and referenced the tax rulings. Got a call back this arvo, still too hard for them and they have forwarded my letter to our corporate taxation dept.

If the response is unfavourable I'll write another letter and go for a personal ruling from the ATO as well.

did you get an answer?

btw I spoke to the FBT expert at CFL about this. She said she was aware of MT2024 and started misquoting it all over the place (she just didnt know the first thing about it really). I asked if she had seen or read it.. answer: 'no'.

I told here I'll send all the details to have a look, and get back to me with her thoughts (I emailed everything). She didnt get back to me of course, probably because she realised it was above board.

If you like, I could chase her up. BUT she did say, they will do it regardless, provided your employer sanctions the deal, as that is where the FBT reporting requirements lay apparently. ie. It's not up to CFL, it's up to your employer (for a novated lease anyway, maybe it depends on the type of lease).

[LSX-438]

Originally posted by Chappo
Yeah, but that's the issue for me at the moment, the rules don't seem to be clearly defined (well not to me anyway :confused: ). As far as I can work out you must use the ute primarily for work, just driving to and from work doesn't cut it.

Point them to this:

http://www.ato.gov.au/businesses/content.asp?doc=/content/fbt_guide.htm

tell them to read section 4.6 and 18.2, and ask then what they think this means:

An employee's private use of a taxi, or of a panel van, utility or other commercial vehicle (ie. one not designed principally to carry passengers) is exempt if the employee's private use of such a vehicle is limited to:

* travel between home and work
* travel which is incidental to travel in the course of duties of employment, and
* non-work-related use that is minor, infrequent and irregular (eg. occasional use of the vehicle to remove domestic rubbish).


Seems quite explicit to me.

[nthnbeachesguy]

Well i have just read this entire thread from start to finish and im not sure if i am any the wiser for it. I have no idea if i am eligible or not for any of the exemptions etc on for my ute, im not even sure exactly of what a novated lease is.

My ute is on a commercial hire purchase over 4 years with a residual payment at the end of that term. I use the ute to carry equipment on a regular basis and drive to and from work but the majority of kms are built up driving out to work sites during my work day. I also drive the ute for private use on the weekends and log every KM i do wether it be private or business for a 3 month period.

The salary package i was offered when i started the job was $XXXXX salary and $XXXXX car allowance on top of that. I was told that i could take the car allowance part of my salary tax free by filling in a tax exempt application as long as i was going to spend at least equal too or more than the car allowance per year!!!!

My questions are basically, what category do i fit into as far as leases etc go and is this the best way to set up the car for maximum tax benefits???? Have spoken to accountants but they all seem to unbelievably hazy on what u can and cant do and let alone what will maximise the benefits!!!!!

[LSX-438]

This post is essentially about miscellaneous tax ruling 2024 and how it relates to novated leases.

It's about paying for your car pre-tax and minimising fringe benefits tax.

A novated lease is where your employer, yourself and the finance company enter into an agreement whereby the car is provided for your exclusive use; they take the lease and running costs out of your pre-tax salary. You normally get hit with FBT; depending on how k's travelled during the year. The theory is higher number of k's travelled implies higher business use thus less fringe benefit tax (even though it's 100% private).

If you use the car for non-work related use, such as on the weekends or whatever, the MT2024 may not be for you:

If the use of the vehicle exceeds the limits as set out above (work related) then it will be a car fringe benefit. All the private use of the vehicle including the travel between home and work will be taken into account in determining the business percentage under the operating cost method.

I dont think a novation agreement really works with hire purchase (I dont think it is advantageous due to GST implications or something). I am talking out of my arse here, you really need to find a switched on accountant. If you can swap to a regular novated lease and ahere to the private use conditions (doesnt sound like you can) then you can effectively pay for all your lease and running costs pre-tax, with zero FBT hit.

[MalooR8]

You have to find out firstly, are you currently paying any FBT? Your employer may have had you sign a stat dec or something with regard to usage, did they know you were buying a ute? you may have already been covered by this

Good to hear your is finally on its way ForrestD!!

[Firebird 5.7L]

Originally posted by forrestd
did you get an answer?

btw I spoke to the FBT expert at CFL about this. She said she was aware of MT2024 and started misquoting it all over the place (she just didnt know the first thing about it really). I asked if she had seen or read it.. answer: 'no'.

I told here I'll send all the details to have a look, and get back to me with her thoughts (I emailed everything). She didnt get back to me of course, probably because she realised it was above board.

If you like, I could chase her up. BUT she did say, they will do it regardless, provided your employer sanctions the deal, as that is where the FBT reporting requirements lay apparently. ie. It's not up to CFL, it's up to your employer (for a novated lease anyway, maybe it depends on the type of lease).

Thats basically where it stands at the moment, CFL will do the deal but only if its sanctioned by the employer. Sounds like I was probably speaking to the same lady as you at CFL.

My inquiry has ended up with a tax specialist in our corporate tax dept. Its been there for a few weeks now with no response, and it looks like I may never get a response out of them unless I follow it up... Reckon I'll make a phone call on Monday and see wtf is happening with it.

Congrats on the new ute!

[LSX-438]

maybe you should write to the ATO and get the decision in writing. the document they send you stipulates you will not be penalised for following the advice as per the letter. in the end, they cant really argue with the ATO letter.

[jab]

http://law.ato.gov.au/atolaw/view.htm?basic=+mt%202024&&docid=MTR/MT2024A/NAT/ATO/00001

says

Holden Ute Series III 179kw* V8

179kw??

[LSX-438]

Originally posted by jab
http://law.ato.gov.au/atolaw/view.htm?basic=+mt%202024&&docid=MTR/MT2024A/NAT/ATO/00001

says

Holden Ute Series III 179kw* V8

179kw??

the list was put together in 2000 and has not been updated.

[Firebird 5.7L]

Originally posted by forrestd
maybe you should write to the ATO and get the decision in writing. the document they send you stipulates you will not be penalised for following the advice as per the letter. in the end, they cant really argue with the ATO letter.

I wrote to the ATO awhile ago and then forgot about it. Today I'd received a letter from them! :D They basically say the same as what is written in MT2024 etc, and that if the conditions of use are met the vehicle will be exempt from FBT. They also state that by relying on the advice I will not be charged any penalty if I make a mistake, but that interest may be charged if they determine that tax has been underpaid.

Looks like its time for some follow up and we'll see what happens. Fingers crossed!

[LSX-438]

good luck with it. i found it a bit of a struggle even after the ATO letter, but eventually pushed it through as no accountant could give any actual reason why it cannot be done. they still basically implied it was 'not in the spirit' of th act. They even tried to tell me you have to be a tradesman to do this! (I had the ATO dispell that myth in writing). Also, my emplyer asked me to sign an additional document absolving them of responsibility (i dont think it would stand up but i did it to keep them happy).

in the end it's worth it, I got my Ute a couple of days ago. mate over the term of the lease i'm saving in the order of $20k, roughly the residual value..........

[sandmanls1]

awesome forrestd very close to doing the same thing with Nick had a drive today, series 2 is very nice. Yes the savings are around 20k pre tax over the life of the lease plus one would assume improved resale on the ute as well. No brainer if I can get it through.

[sandmanls1]

looks like facing the same battle as you duncan... first guy I go through to get me good prices quoted the 1 tonne rule which we know is crap, then Custom Fleet also saying it cannot be done, also quoted the 1 tonne rule. Looks like I will also have to get that letter from the ATO and then try and push it through. It all seems to hard for a large organisation and perhaps they don't want to set a precedent either, nad not get in trouble with the tax office. How loose is the personal use issue and occasional work usage etc. Is any documentary evidence required?

[Chappo]

The last bit of advice I got about this was that 'Yes, your ute qualifies for FBT exemption, but only when the company owns the ute'. This doesn't make sense to me, novated leases are all the same, the employee owns the car. This whole thing is starting to shit me to tears :box:

And these people are so called experts!

[Avatar]

Maybe they just don't want the flash corporate carpark full of utes. :lol: :lol:

[sandmanls1]

I'm thinking the same in my case b/c once one person does it everyone will want to do it no doubt......

[Chappo]

Originally posted by Avatar
Maybe they just don't want the flash corporate carpark full of utes. :lol: :lol:

Well that's just un Australian :soap:

[LSX-438]

Originally posted by Chappo
The last bit of advice I got about this was that 'Yes, your ute qualifies for FBT exemption, but only when the company owns the ute'. This doesn't make sense to me, novated leases are all the same, the employee owns the car. This whole thing is starting to shit me to tears :box:

And these people are so called experts!

Ask them where it stipulates this in the act...

The exemption relates to cars not principally designed to carry passengers thus the fringe benefit is diminished. Your profession - and what the car is used for during business hours - (if anything at all) is irrelevent.

Pass this link on to your people:

http://www.ato.gov.au/businesses/content.asp?doc=/content/fbt_guide.htm&page=22#H23_4

Tell them to read sections 4.6 and 18.2

If this is still not good enough, write to the ATO (they are mandated to respond within 28 days)... spell out your circumstances to the ATO, your profession, and the fact the car will be provided to you under a novated lease. In the letter, ask the ATO if you can claim the exemption. I did, and the answer came back 'YES'. PM me if you want help drafting the letter.

Actually before you do that, ask your employer if you can get clarification from the ATO, will that be ok? The fact is they can't really knock you back... I guess it's a question of how far you are willing to push it. Just remain calm, get the necessary documentation and show them. You wouldnt believe the knock backs i had, including the head FBT person at commonwealth fleet lease, but as in every case, when i showed them the doco, they all shut up! None of these experts could give me a valid reason why it cannot be done. Dude it's your entitlement don't let some office administrator deny you this benefit.

[Chappo]

Thanks forrestd, I think I will write a letter to the ATO, sick of arguing with the other pricks!

[sandmanls1]

keep us informed how you go chappo, looks like i will be doing the same thing also. have you pm'ed Nick at Doncaster Holden yet?

[Chappo]

Sorry double post :doh:

[Firebird 5.7L]

Finally received a response from my company, they refuse to do it. :nopity:
-----------------------

Further to your correspondence with xxxxx, I have discussed your query with xxxxxx.

As you are most probably aware as a matter of policy, xxxxxx generally only allow their employees to salary sacrifice cars as defined in s.136 of the Fringe Benefits Tax Assessment Act ("FBTAA").

A utility vehicle designed to carry a load of less than one tonne falls within the definition of a car. Assuming the particular Commodore Ute you are considering salary packaging falls within the one tonne load carrying restriction, then you are permitted to salary package the vehicle by way of a novated lease.

That said, xxxxxx have no means in place of tracking the extent of "work-related travel" as defined in section 8(2) of the FBTAA and/or the extent of any other private travel be it minor, infrequent or irregular. Further, the terms minor, infrequent and irregular are open to interpretation and are a question of fact in each individual case. For ease of administration (with over 1,500 novated leases to administer) and as a matter of prudent policy, xxxxxx do not allow their employees to avail themselves of the exemption available under section 8 of the FBTAA.

Therefore, should you choose to salary package a ute designed to carry one tonne or less, xxxxxx (and therefore you), will be subject to FBT in accordance with the statutory calculation method applicable to all cars.

I trust this has answered your query, I have left you a voicemail in relation to this matter. Please do not hesitate to call me should you wish to discuss further.

Best regards,

[LSX-438]

what a cop out, sorry to hear.

fwiw, I had to sign a declaration stating i would ahere to the "private use conditions" and the employer would not be responsible for any FBT liability.

can you go to a specialist salary packaging company?

maybe you can talk to the ATO - and still claim back the FBT paid using your tax return? maybe ask the ATO what is normally required to "prove" the work related thing, and show that to your emplyer.. i think they are just making up an excuse to dodge doing it.

[MalooR8]

I think the words "for ease of administration" seem to be the major cause - the rest of the reply is pure retoric.

[Jonesy]

If your spending enough on fuel and expenses this will cancel out any fbt anyway. Claim your work related travell expenses from your companies HR/accounts dept. This really is the next best thing and is what the majority of novated lease holders do.

Jonesy

[sandmanls1]

I'm the same as well, it's all too hard for them...... Our total package covers all work expenses as well except for an e tag.. Fuel is unlimited and insurance included... Looks like an SS now for me..

[LSX-438]

really sorry to hear it's all too hard for your people.

of course we all know it's not due to technical constraints/limitations... it's just psychosomatic bullshit whereby they personally have decided the ruling sounds too good to be true, and they have blocked it (miserable gits).

[Grant]

I'm currently working on convincing my lease manager about the FBT exemption on utilities, which is proving to be pretty tough.

I'll try to summarise useful tax ruling references, from the Fringe Benefits Tax guide (http://www.ato.gov.au/businesses/content.asp?doc=/content/fbt_guide.htm).

I am not an accountant, be sure to consult one before making any decisions. All of the following assumes you undertaking a novated lease from your employer (or you are self-employed). It is also assumed that the vehicle you are leasing is classed as a utility for tax purposes.

4.6. Exempt car fringe benefits - specifies that if a utility vehicled owned by your employer is provided for you to use for work related purposes, that is, where private use is "minor, infrequent and irregular", you will not be subject to FBT. Note that work related use for a utility INCLUDES travel to/from work.

18.2. Cars (section 8) - defines private use. If you use the vehicle outside these guidelines, you will have to declare a residual fringe benefit, NOT FBT!

16.6. Taxable value of motor vehicles other than cars - If you do make use of the vehicle outside the private use limitations as specified in 4.6 & 18.2, you will need to declare a residual fringe benefit. The methods for calculating the residual fringe benefit can be found in this section.

[LSX-438]

Grant,

Perhaps you need to get a signed letter from the ATO sanctioning it. My letter says the emplyer will not be penalised when relying on the advice... They are probably concerned with their FBT reporting responsibilities. if you can prove that is not an issue you should be ok.

[PepeLePew]

Dunno bout you guys but seriously, I'd like it to be tax ex but can understand why the law ways primarily business purposes (as advised by our HR guys),,,I'll have to get over it and get on with life :)

[vxcalaiszzz]

Salary packaging for cars is one of the few perks left these days so it's lucky we love cars so much. Government is always talking about removing it but the business execs that make political donations love there cars too. ;)

You thought it is was hard to get an FBT exempt ute onto a novated lease with your employer, you should try getting a 380rwkw supercharged calais on a novated lease. Try explaining whipple, head & cam, KAAZ, mags etc to the chick in HR :lol: . Hard work but got there in the end :D, pay FBT though :(

Just read this old thread and, being an accountant in a former job and an office worker, all I can say is the Australian tax system is based largely on self-assessment with ATO audits to check. If you think you meet the FBT exemption criteria, and some would, good luck to you.

Let's say a home-office-home round trip is 20km, you work 5 days/week for 50 weeks per year, total kilometres is 5,000? Let's say "minor, infrequent and irregular" would be, at a stretch, say 20% of total km's. So if you drive more than 6,000km/annum I'd have thought you'd be pretty stuffed trying to prove you met the criteria. But you have to get audited to get caught.

Ideally there is a quarter mile track between your house and work for the "infrequent and irregular" incidental trip on the way to work via the dragstrip for a measly 400m of :burnout: :driving:

[LSX-438]

Dunno bout you guys but seriously, I'd like it to be tax ex but can understand why the law ways primarily business purposes (as advised by our HR guys),,,I'll have to get over it and get on with life :)

Don't forget a regular novated lease gets FBT discounts based on number of k's travelled, theory being high k's = higher business use thus less fringe benefit (so FBT rate is reduced) however we all know it is actually 100% private use. I guess this goes back to when FBT was introduced and compromises were made. In the end, nealy everyone is claiming FBT discounts on their novated lease, relating to mythical 'business use'.

[Grant]

Grant,

Perhaps you need to get a signed letter from the ATO sanctioning it. My letter says the emplyer will not be penalised when relying on the advice... They are probably concerned with their FBT reporting responsibilities. if you can prove that is not an issue you should be ok.

I actually sent him a link to the letter you scanned and posted :)

[Grant]

Dunno bout you guys but seriously, I'd like it to be tax ex but can understand why the law ways primarily business purposes (as advised by our HR guys),,,I'll have to get over it and get on with life :)

If you read the tax law links posted above, it's all quite simple.

If you are provided the utility for private use by your employer and you meet the private use rules in section 4.6, you don't have to pay FBT. Otherwise, you only have to pay tax on the residual benefit which is calculated on distance travelled, and is offset by any money you spend towards operation costs.

If you really want to make it happen, talk to an accountant.

[Robjo]

This is a long post, but this is definately available.

I am not a tradesman and run a 4x4 dual cab SR5 hilux salary packaged via novated lease and it is FBT exempt.

Both the type and use of this vehicle meets the criteria of the Australian Tax Office for being exempt from FBT. Firstly it is defined as a commercial vehicle and not a car (as it is a utility with a load carrying capacity greater than one tonne). Secondly the use of this vehicle consists solely of eligible work-related travel and my use of this vehicle is restricted to travel to and from work and any other travel is incidental in the course of performing duties of employment.
The supporting ATO guidelines and subsequent rulings are detailed below, supporting the above paragraph.
From ATO Website, car Fringe benefits Guide & Workbook, the following is a definition of a car fringe benefit.
A car fringe benefit most commonly arises when a car held by an employer is made available for the private use of an employee. A car held by an employer is generally a car owned by, or leased to, the employer. The descriptions given in this guide relate to the more usual circumstances giving rise to car fringe benefits.
It is important to note that a car benefit provided by another person on behalf of the employer or provided to another person on behalf of the employee (eg. a relative) may also be a car fringe benefit. The ‘employee’ may even be a former employee or a future employee.
The following types of vehicles (including four wheel drive vehicles) are defined as cars:
 Motor cars, station wagons, panel vans and utilities (excluding panel vans and utilities designed to carry a load of one tonne or more);
 all other goods-carrying vehicles with a designed carrying capacity of less than 1 tonne; and
 all other passenger-carrying vehicles with a designed carrying capacity of fewer than 9 occupants.
3.1. When is private use of a car not a fringe benefit?
There are circumstances in which private use of a car may be exempt from fringe benefits tax. This is usually referred to as ‘exempt private use’.
An employee’s private use of a taxi, or of a panel van, utility or other commercial vehicle (ie. one not designed principally to carry passengers) is exempt if the employee’s private use of such a vehicle is limited to:
Travel between home and work or travel which is incidental to travel in the course of duties of employment; and non-work-related use that is minor, infrequent and irregular (eg. occasional use of the vehicle to remove domestic rubbish).
Following are the ATO rulings on this issue.
MT» «2024»
Link:
http://law.ato.gov.au/atolaw/view.htm?basic=+mt%202024&&docid=MTR/MT2024/NAT/ATO/00001

...next post will have the ruling

[Robjo]

TAXATION RULING NO. «MT» «2024


4. Alternatively, under sub-section 8(2), a vehicle may qualify for the exemption if, while classified as a car for the purposes of Division 2 of Part III of the Act, it is a taxi, panel van, utility truck or any other road vehicle that, while designed to carry a load of less than one tonne, is not designed for the principal purpose of carrying passengers.

RULING

6. Dual cabs, particularly those of lesser load capacities, are commonly fitted with styled steel well bodies and are often referred to as "utes" in advertising material. An initial question to be determined therefore in deciding the eligibility of dual cabs for the work-related use exemption is whether they qualify as "utility trucks" within the meaning of paragraph (a) of the definition of car in sub-section 136(1) and, accordingly, within the meaning of sub-section 8(2). If dual cabs are in fact utility trucks within the meaning of sub-section 8(2), it follows that they would qualify for the concession afforded by that sub-section irrespective of their load or passenger carrying design features.

8. It follows that crew cabs will be capable of qualifying for the work-related use exemption only if either of the following tests are satisfied -
(a)
they are designed to carry a load of one tonne or more, or more than eight passengers (sub-section 47(6)); or
(b)
while having a designed load capacity of less than one tonne, they are not designed for the principal purpose of carrying passengers (sub-section 8(2)).
9. Current model crew cabs have a maximum seating capacity of seven and, as such, could not qualify under the second limb of (a).
10. Whether a particular vehicle is designed to carry a load of one tonne or more is to be determined on the same basis as that applied in determining eligibility for the former income tax investment allowance.
11. Consistent with that approach, the designed load capacity of a motor vehicle is to be taken as the gross vehicle weight as specified on the compliance plate by the manufacturer (broadly, the maximum all-up loaded weight), reduced by the basic kerb weight of the vehicle. For this purpose, basic kerb weight is synonymous with unladen weight, as specified in the Australian Design Rules, being the weight of the vehicle with a full tank of fuel, oil and coolant together with spare wheel, tools (including jack) and installed options. It does not include the weight of goods or occupants.

14. As previously mentioned, a dual cab that has a designed load carrying capacity of less than one tonne may still qualify for the work-related use exemption, under sub-section 8(2), if the vehicle is not designed for the principal purpose of carrying passengers. It is considered that the appropriate basis for determining this issue is whether or not the majority of the designed load capacity is attributable to passenger carrying capacity. It is understood that this approach is consistent with that adopted under the Australian Design Rules in determining what is a passenger vehicle.
15. For this purpose the designed passenger carrying capacity is to be determined by multiplying the designed seating capacity (including the driver's) by 68 kg, which is the figure adopted for the purposes of the application of the Australian Design Rules.
16. If the total passenger weight so determined exceeds the remaining "load" capacity, the vehicle is to be treated as being designed for the principal purpose of carrying passengers and as such ineligible for work-related use exemption.
17. By way of illustration, if a vehicle has a gross vehicle weight of 2,000 kgs, a basic kerb weight of 1,400 kgs, and has a designed seating capacity of five, the vehicle would be considered to be a vehicle designed principally for the carriage of passengers. This is because the total load capacity is 600 kgs of which the majority, 340 kgs, would be absorbed by its designed passenger carrying capacity.
18. The position of current release dual cab vehicles has been reviewed on the basis of published information made available to this office. The results are detailed in the attachment.
.
20. Accordingly, provided that employee use of these dual cab vehicles in a particular FBT year is restricted to travel to and from work and any travel that is incidental to travel in the course of performing duties of employment, there will be no FBT liability.
21. The two models listed as being ineligible for the concession are designed to carry a load of less than one tonne and, on the application of the test detailed above, are designed principally for the carriage of passengers.

COMMISSIONER OF TAXATION

[SS Enforcer]

Finally received a response from my company, they refuse to do it. :nopity:
-----------------------


A utility vehicle designed to carry a load of less than one tonne falls within the definition of a car. Assuming the particular Commodore Ute you are considering salary packaging falls within the one tonne load carrying

Best regards,


I have a letter I got from a ford salesman that states that even though the xr8 isn't rated to cart 1 ton it's still fbt exempt same Goes for the commmie.

I think I gave the copy to my accountant.

[Ako]

I am having trouble finding the rulings MT2024 and MT2024a. The initial links don't work anymore. Anyone find em?

Thanks for the above readings guys. I am an accountant, and I work in a large Private business and we deal with novated leases for our employees. Until this thread I had no idea this could be done, but after reading the tax offie info, I can't see why not. I just want to get all the ducks in line.

Thanks

Brad

[MalooR8]

Geez I started something with all this didn't I. :lol:

Their server is quite slow for some reason but if you go to

here (http://law.ato.gov.au/atolaw/index.htm)

click on the get a document link under the quick access banner

and enter the search field MT2024 it will find that and its addendum.

[VXSSV8]

Just to add to above, you will need to put a space between 'MT' and '2024' when you search otherwise you get nothing.

...ie 'MT 2024'.

;)

[Grant]

Ask them where it stipulates this in the act...

The exemption relates to cars not principally designed to carry passengers thus the fringe benefit is diminished. Your profession - and what the car is used for during business hours - (if anything at all) is irrelevent.




I have just found out from my lease manager that this isn't quite true.
The tax law states that a vehicle which is classified as a car (less than one tonne load capacity, not principally designed to carry passengers IS a car) must be used exclusively for the purpose of producing assessable income. This does NOT include travel to and from work/home. Doh.

I'm now looking at the MT 2024 exceptions, which is why, I assume, you didn't have any problems. You bought a vehicle which is explicitly allowed.

Cheers.

[Grant]

I have a letter I got from a ford salesman that states that even though the xr8 isn't rated to cart 1 ton it's still fbt exempt same Goes for the commmie.

I think I gave the copy to my accountant.

This contradicts the tax law - what justification did your salesman give you? If you use the vehicle exclusively for work, thats a different reason than the vehicle itself being classed as a utility. Do you know which of the two reasons was used for FBT exemption?

[MalooR8]

This contradicts the tax law - what justification did your salesman give you? If you use the vehicle exclusively for work, thats a different reason than the vehicle itself being classed as a utility. Do you know which of the two reasons was used for FBT exemption?

If its a single cab ute whether it carries a tonne or not is no problem as the vehicle has much more load space than passenger carrying capacity

The tonne ruling applies more to duel cabs that have less load space

Lots of lease managers and accountants don't understand the rulings.

[Grant]

If its a single cab ute whether it carries a tonne or not is no problem as the vehicle has much more load space than passenger carrying capacity

The tonne ruling applies more to duel cabs that have less load space

Lots of lease managers and accountants don't understand the rulings.

As usually happens, 5 minutes after I post I realise I am wrong.

There is also a ruling which states that if the passenger carrying capacity (weight) of a utility is < 50% of gross payload, then a utility is also exempt...
Ford publish a list of FBT exempt vehicles, which includes the XR6, XR6T and XR8 based on this ruling.

[clixanup]

Any passenger car (or commercial vehicle with a carrying capacity of less than 1 tonne) can be FBT exempt in the right circumstances.

It all comes down to purpose. That is: What do you use the vehicle for?

Basically, that is why there is no answer which applies to everyone.

It doesn't matter if the vehicle is owned outright, leased, hire purchased, etc. The question the ATO will always ask is: What is the vehicle used for? Purpose is the lynchpin from which FBT hangs. No private use = No FBT. Simple. If your accountant tells you otherwise, you need to find a new one.

I wouldn't trust any list of vehicles published by a manufacturer about which vehicles are FBT exempt. How do they know what you are going to use it for?? A sales rep who uses their car 90% of the time for visiting clients is only going to generate an FBT liability for his employer on the other 10% of the vehicle operating costs. Even then, he/she can exempt his/her employer from FBT by re-imbursing the private part of the costs.

Two pieces of advice:

1. Keep a log book for at least 3 months of the year (preferably 3 fairly busy months)
2. See your accountant if all the above is clear as mud.

[LSX-438]

IMO the whole point of MT2024 actually relates to private use and when it is FBT exempt, as per section 3.1 above. There is a list of cars of course (published by the ATO) but it is not updated. I believe there is a way to work out the load vs passenger carrying ratio, thus the list from ford, etc.

[clixanup]

IMO the whole point of MT2024 actually relates to private use and when it is FBT exempt

Err, I'm sorry, but it doesn't actually work that way.

If a business claims a tax deduction for the operating costs of a vehicle(1) provided to an employee and that vehicle is used wholly or partially for private use, then the business will be suject to FBT accordingly . <-- Full stop.

(1) Vehicle for the purposes of the FBT act is defined under s136(1) of that act as: "..a motor vehicle , being a motor car, station wagon, panel van, utility truck or other road vehicle designed to carry a load of less than one tonne or less than nine passengers." The definition goes on to specifically exclude motorbikes and taxis.

Seems pretty clear cut to me.

BTW - In a "review situation" do you honestly believe that the ATO will accept Ford's list as valid without taking any other details into account? They'll treat it the same way they treat depreciation schedules from property developers.....:hide:

And MT 2024 is only a more detailed interpretation of the above definition anyway.

Discuss it with your accountant if you don't believe me.

[LSX-438]

Miscellaneous tax ruling 2024 is about an FBT exemption relating to private use which is work related. What is the misunderstanding? No point harping on about private use and work related definitions i guess, but these are both spelt out in the ruling text as linked and quoted here ad nauseam.

The last person I would ask about this is a common garden accountant which is why I asked the tax office direct. The ATO published a list of applicable cars in march 2000 (I think) and yes I believe there is a way to work out which vehicles are eligible for the exemption. I'll call the tax office tomorrow if you like?

[clixanup]

Miscellaneous tax ruling 2024 is about an FBT exemption relating to private use which is work related.

OK. Now I know what I'm dealing with. :confused:

From the ATO's viewpoint there are two (2) types of travel: Work related and non-work related. Never the twain shall meet.

Basically, it has to be either private or work related. Can't be both. So, private in this context means "non-work related."


The last person I would ask about this is a common garden accountant which is why I asked the tax office direct. The ATO published a list of applicable cars in march 2000 (I think) and yes I believe there is a way to work out which vehicles are eligible for the exemption. I'll call the tax office tomorrow if you like?

As a gnome, I'm telling you that you're doing yourself a disservice by not talking to your accountant about this.

You wanna call the ATO, fine. I've told you what they'll tell you - if you manage to get a straight answer out of 'em that is.....

If you want to package a car that fits the definition in my previous post, then your private use portion will attract FBT (unless you re-imburse the business for that portion). If you want to package a one-tonner (of any make) then you'll be exempted. Simple as that.

[LSX-438]

indeed it's confusing, which is why most don't get it (accountants included).

the exemption comes with it's own definition of 'private' use which is 'work related', it's all there in black and white above. and yes this is perhaps extraordinary within the context of a normal salary sacrafice/lease attracting FBT, but that is what MT2024 (and this thread) is all about; an exemption to the norm.

i've talked with several accountants and a few FBT 'experts' from major leasing companies and salary sacraficing companies. none had a clue, which is why I had to go to the ATO.

[clixanup]

OK part of your problem is that the FBTAA was designed as a catch-all.

So, if an office worker packages a one-tonner for purely private use, it will not be caught under the car provisions of the act. However, there are general provisions under which the business will be liable for FBT because there is still a benefit being provided by the business.

If you want, PM me with the details of your situation and I'll give you my opinion.

In case you're wondering, I deal with this stuff daily and have a pretty good working knowledge of this area.

BTW - You must have had a bad run of accountants because you haven't stopped slagging us off. Some of us do try to expand our knowledge and keep up to date you know. Its a bit disheartening to see that people have such a low opinion of the world's 2nd oldest profession these days.

[LSX-438]

perhaps you should read the thread from the beginning, MT2024, my email to ATo and their response, and tell us all what the problem is because i dont understand what your point is.

[clixanup]

perhaps you should read the thread from the beginning, MT2024, my email to ATo and their response, and tell us all what the problem is because i dont understand what your point is.

The point is that you've been to-ing and fro-ing and going around in circles while the answer is staring you in the face.

Package a one-ton ute and you are exempted under the car provisions of the FBT act. However, if you use it for private travel (which for the purposes of the FBT act excludes travel to and from work) the business will be liable for FBT under other provisions of the FBTAA where they pay for the operating costs.

This is a pretty simple area of the law and you're trying to make it oh-so-complicated because you don't understand it. It may also have something to do with the fact that you're not getting the answer that you want to hear.

Example: An office worker packages a one-ton ute and the employer pays the operating costs. He/she ONLY drives the ute to and from work and maybe to visit customers/clients = No FBT. On the weekend he/she takes it shopping then to pick up the daughter from ballet class then off to granny's place for tea = FBT on the non work related portion (under the general provisions of the FBTAA). This is what the letter you got from the ATO said. This is what the law says and is the reason why they don't need to give you a ruling.

[VXSSV8]

As a garden-variety type ;) I have to admit I was not aware of this ruling but after reading through MT 2024 and MT 2024A I think both clixanup and forestd both have valid points. IMO yes you can have a Ute less than one tonne (ie. SS or whatever) which is FBT exempt as long as your use of the vehicle is used solely for work-related travel and private use that is minor, infrequent and irregular. As clixanup said almost anything can be FBT exempt as long as you use it solely for work-related use. Due to the fact you can only carry 1 passenger in a Ute the ATO has allowed a small exemption for private use to save on the complexities of FBT liabilities for the thousands of tradesmen with Utes. Yes the ATO lists vehicles which qualify for FBT exemption BUT, only if used for work-related travel or private use that is minor, infrequent and irregular. The problem obviously arises on what is the definition of 'minor, infrequent and irregular'. This is where you could get in trouble from the ATO if you abused the definition, hence why you need to think carefully what your tax obligations will be if you do use it moderately for private use because you will be stung if caught abusing the ruling. Forrestd, just remember that if you aren't a tradesmen and your driving a SS ute with moderate to high-ish km then you may be looked at a little harder by the ATO. As I see it the ruling is there to save on the complexities of FBT liabilities for genuine work-related Ute use, not for Joe average office worker to drive a spanking V8 Ute to and from work and on weekend's tax free. If it was me, being an office worker and I was going to use it sparingly for private use and to-and-from work everyday, carrying only my briefcase in the boot then I wouldn't have a problem doing it because as I read it that is within the rulings as they are written.

Goodluck to those taking advantage of the ruling. Good find. :D

:cheers:

[LSX-438]

However, if you use it for private travel (which for the purposes of the FBT act excludes travel to and from work) the business will be liable for FBT..

does not the MT2024 deal with this though? defining what is perhaps normally considered 'private' (driving to and from work) as 'work related' for the purposes of this particular exemption?

yes I think clixanup has valid points, but they do not seem to be about the MT2024 exemption and how it applies within the context of this thread.

clixanup, if I do as VXSSV8 says, and adhere to the private use limitations as per MT2024, what is the problem?

[clixanup]

[i]yes I think clixanup has valid points, but they do not seem to be about the MT2024 exemption and how it applies within the context of this thread.

clixanup, if I do as VXSSV8 says, and adhere to the private use limitations as per MT2024, what is the problem?

There is no problem as long as you only use it for work related travel. If your private use accounts for a fair portion of your use of the ute, expect trouble.

The best advice I can give you is to keep a log book (for at least 3 months of the year) - the ATO will check the odo and ask you to verify it if your private use seems excessive. A log book is your best defense in that case.

BTW - MT 2024 is purely a clarification of what is already stated in the FBT legislation.

[sloone]

Forrestd, just remember that if you aren't a tradesmen and your driving a SS ute with moderate to high-ish km then you may be looked at a little harder by the ATO.


What would you call moderate to highish KM? As I am looking at this for my next car and travel 110km per day (26,000km plus per 48 week year) just to and from work.

[LSX-438]

There is no problem as long as you only use it for work related travel. If your private use accounts for a fair portion of your use of the ute, expect trouble.

The best advice I can give you is to keep a log book (for at least 3 months of the year) - the ATO will check the odo and ask you to verify it if your private use seems excessive. A log book is your best defense in that case.

BTW - MT 2024 is purely a clarification of what is already stated in the FBT legislation.

i guess we agree then...

[VXSSV8]

What would you call moderate to highish KM? As I am looking at this for my next car and travel 110km per day (26,000km plus per 48 week year) just to and from work.

If you can justify it then there shouldn't be a problem.

:)

[MalooR8]

There is no problem as long as you only use it for work related travel. If your private use accounts for a fair portion of your use of the ute, expect trouble.

The best advice I can give you is to keep a log book (for at least 3 months of the year) - the ATO will check the odo and ask you to verify it if your private use seems excessive. A log book is your best defense in that case.

BTW - MT 2024 is purely a clarification of what is already stated in the FBT legislation.

Best thing for people to do is to get their own tax advice and if in doubt get a personal ruling as some have done here from the ATO. That way as your relying on their advice in good faith you can never be prosecuted. I've never heard of the ATO ever checking speedos BTW.

My wife who is a chartered accountant ran a FBT exempt vehicle to and from work for a few years. She didn't keep any such log book of our personal usage because in her words, the vehicle is FBT exempt and as such your not required to keep track of its usage.

Make your own decisions.

[clixanup]

Best thing for people to do is to get their own tax advice

That's what I've been saying all along...


and if in doubt get a personal ruling as some have done here from the ATO. That way as your relying on their advice in good faith you can never be prosecuted. I've never heard of the ATO ever checking speedos BTW.

The ATO will not issue a private ruling where the law is clear-cut.

I have first hand knowledge of cases where the ATO have done things far worse than checking a cars odo to recover a mere few thousand dollars.


My wife who is a chartered accountant ran a FBT exempt vehicle to and from work for a few years. She didn't keep any such log book of our personal usage because in her words, the vehicle is FBT exempt and as such your not required to keep track of its usage.

It depends on the circumstances which made the car exempt. I bet she wasn't driving a one-tonner. I drive a car which is FBT exempt too and don't keep a log book because all my travel is private.

Personally, if it was me having to prove that I used the car for work related purposes(1) 100% of the time (or near enough to it) I'd be keeping a log book to be on the safe side. Especially when you're stretching the law in this manner - see VXSSV8's post above.

(1) work related purposes: the extended definition as discussed above.

[MalooR8]

That's what I've been saying all along...



The ATO will not issue a private ruling where the law is clear-cut.

I have first hand knowledge of cases where the ATO have done things far worse than checking a cars odo to recover a mere few thousand dollars.



It depends on the circumstances which made the car exempt. I bet she wasn't driving a one-tonner. I drive a car which is FBT exempt too and don't keep a log book because all my travel is private.

Personally, if it was me having to prove that I used the car for work related purposes(1) 100% of the time (or near enough to it) I'd be keeping a log book to be on the safe side. Especially when you're stretching the law in this manner - see VXSSV8's post above.

(1) work related purposes: the extended definition as discussed above.


The ATO will give a personal ruling if you ask them nicely, see forrestd for his letter he explained his situation and they replied with an ok and provided it in writing. Then your not stretching the law whatsoever, your following it and doing what they've told you is ok.

My wife was driving a duel cab hilux 4x4 (no not a 1 tonner, 970kg so it was a little grey being a duel cab).

[clixanup]

The ATO will give a personal ruling if you ask them nicely, see forrestd for his letter he explained his situation and they replied with an ok and provided it in writing. Then your not stretching the law whatsoever, your following it and doing what they've told you is ok.

A letter doesn't make a ruling. If the law is there in black & white, why do you need written confirmation of it? How does that protect you more?

WRT stretching the law - re-read VXSSV8's post above.

[LSX-438]

well apparently I've been "to-ing and fro-ing and going around in circles" about "a pretty simple area of the law trying to make it oh-so-complicated" etc.. Don't quite get that, but we've come full circle back to the point: MT2024 and how we can take advantage of it. Yes there are caveats, and yes they are in black and white, we've all read it. We really need to clean this thread up.

[Grant]

A letter doesn't make a ruling. If the law is there in black & white, why do you need written confirmation of it? How does that protect you more?

WRT stretching the law - re-read VXSSV8's post above.

In my case my lease manager will not permit the lease without a ruling from the ATO as he does not agree with my assertion that an SS ute (not principally designed to carry passengers, 2*68kg < 700kg) driven under the stipulated limitations of irregular, infrequent private use is FBT exempt. I have referred him to all relevant tax law, he just won't read and understand it.

So, that's why, in my case at least, a ruling from the ATO is required.

[clixanup]

So, that's why, in my case at least, a ruling from the ATO is required.

Errr, No. I don't believe a ruling is required in your case.

Let's take it step by step:

1. Can your ute carry 1 tonne? If yes, then it is exempt. If no, continue to next point.

2. Is your ute available for private use on the weekends? If yes, FBT applies to the private use portion. If it is garaged at your employer's premises, it will be exempt from FBT.

3. You'll need to substantiate your use by keeping a log book for 3 contiguous months of the financial year. Private use (as a percentage) will be determined from the aforementioned log book and that portion of the running costs (paid by the employer) will be subject to FBT.

4. If you only use the ute for work and can support your claim with a log book, there will be no FBT applied to the running costs.

ANY vehicle which is used 100% for work related purposes is FBT exempt. Pure and simple. No ruling needed.

If pain persists, consult your accountant. :D

[LSX-438]

Clixanup, are you saying that where a vehicle has a load capacity of 1 tonne or more then it automatically follows it is exempt? I was under the impression you still had to satisfy the private vs work use requirements. Also why the distinction for weekends? Surely if you use it for non-work-related use on other days then the exemption doesnt apply.

BTW Grant, for those vehicles less than 1 tonne, I believe the exemption is extended where: while having a designed load capacity of less than one tonne, they are not designed for the principal purpose of carrying passengers

Further to this, read sections 14 through 17 here:

http://www.austlii.edu.au/au/other/ato/mtr/mt2024.html

There is a simple formula to determine if a car is designed for the 'principal purpose of carrying passengers' or otherwise. The document mentions dual cabs throughout however i believe it applies to regular sub 1-tonne utes too, as per the list published by the ATO a few years back.

[Grant]

Errr, No. I don't believe a ruling is required in your case.

Let's take it step by step:

1. Can your ute carry 1 tonne? If yes, then it is exempt. If no, continue to next point.

2. Is your ute available for private use on the weekends? If yes, FBT applies to the private use portion. If it is garaged at your employer's premises, it will be exempt from FBT.

3. You'll need to substantiate your use by keeping a log book for 3 contiguous months of the financial year. Private use (as a percentage) will be determined from the aforementioned log book and that portion of the running costs (paid by the employer) will be subject to FBT.

4. If you only use the ute for work and can support your claim with a log book, there will be no FBT applied to the running costs.

ANY vehicle which is used 100% for work related purposes is FBT exempt. Pure and simple. No ruling needed.

If pain persists, consult your accountant. :D


You missed my point. Whether or not I can claim an FBT exemption isn't under contention. My understanding of tax is as you have described. I accept the limited use clause.

The problem is my lease manager, who is NOT an accountant, refuses to grant an FBT exemption because he didn't read past the section on how to get a CAR FBT exempt. He never made it to the section on vehicles with a load carrying capacity less than one tonne and not principally designed to carry passengers. It's a personality issue rather than a tax law issue.

Clixanup, you may be rational, my lease manager is not.

[Grant]

Errr, No. I don't believe a ruling is required in your case.

Let's take it step by step:

1. Can your ute carry 1 tonne? If yes, then it is exempt. If no, continue to next point.

2. Is your ute available for private use on the weekends? If yes, FBT applies to the private use portion. If it is garaged at your employer's premises, it will be exempt from FBT.

3. You'll need to substantiate your use by keeping a log book for 3 contiguous months of the financial year. Private use (as a percentage) will be determined from the aforementioned log book and that portion of the running costs (paid by the employer) will be subject to FBT.

4. If you only use the ute for work and can support your claim with a log book, there will be no FBT applied to the running costs.

ANY vehicle which is used 100% for work related purposes is FBT exempt. Pure and simple. No ruling needed.

If pain persists, consult your accountant. :D


Your steps:

1. You neglected to mention that if the carrying capacity is LESS than 1 tonne, but the vehicle is not principally designed to carry passengers then the vehicle is also ELIGIBLE for FBT exemption. It is not automatically exempt even if it can carry over one tonne, the private use limitations must be met (minor, infrequent and irregular private use). The definition of 'not principally designed to carry passengers' is as follows:
The total passenger carrying capacity must be less than half of the gross load capacity. For arguments sake, let's consider an SS ute.
The payload capacity is about 700kg. It can seat two people. For tax and ADR purposes, each passenger has a weight of 68kg. So, at 136kg the total passenger carrying capacity is much less than half of the gross carrying capacity. Therefore, by definition, this vehicle is not principally designed to carry passengers and is eligible for FBT exemption.

Your points from 2 onwards are valid for vehicles which are not FBT exempted by classification (commercial vehicle, taxi, utility etc), and are instead made FBT exempt by usage pattern. In the case of a car, FBT exemption is only applicable where the vehicle is used exclusively in the course of producing assessable income. Again, in the case of a car, this does not include travel to and from work. However, in the case of a utility (as defined above), work related travel includes travel to and from work. How confusing!

This is exactly the argument I am having with my lease manager. His assertion is based on the vehicle NOT being a utility (as defined above), where in fact it is.

BTW, private use of an FBT exempt vehicle outside of the set limitations is not a fringe benefit, it is a residual benefit. By definition an FBT exempt vehicle cannot arise a fringe benefit!


ANY vehicle which is used 100% for work related purposes is FBT exempt. Pure and simple. No ruling needed.

Not true. It depends on the classification of the vehicle. In the case of utility (as defined above) this is true. In the case of a car, this is false unless the vehicle is used exclusively in the course of producing assessable income, which generally DOES NOT include travel to and from work. Actually, now that I reconsider your point, you are correct. The tricky point is that the definition of 'work-related' is DIFFERENT for each CLASS of vehicle.

[mid life]

The situation with a ute or for any commercial vehicle including motorbikes is not a case of are they FBT exempt they are NOT, but they are exempt of a requirement to complete log books. therefore the onus is on you to prove the % of work related use which is claimed,if it is queried. And yes travel from home to work is classed as work related for these vehicles unlike passenger vehicles.

Cheers

[LSX-438]

the ruling MT2024 is actually about which cars are eligble for the exemption

[Grant]

The situation with a ute or for any commercial vehicle including motorbikes is not a case of are they FBT exempt they are NOT, but they are exempt of a requirement to complete log books. therefore the onus is on you to prove the % of work related use which is claimed,if it is queried. And yes travel from home to work is classed as work related for these vehicles unlike passenger vehicles.

Cheers

This generalisation is not accurate.

1. You need to determine if a vehicle is eligible for FBT exemption.

2. You need to determine if your USE of the vehicle is such that you can qualify for exemption. The use of the vehicle may make (1) irrelevant.

If (1) and (2) are true, there is no FBT to pay and there is no need to keep any logs. You are FBT exempt, your vehicle is not a 'car fringe benefit'.

If however (1) or (2) do not qualify for an FBT exemption, you can calculate an exempt portion of use, based on how much work-related travel you do.

The definition of work-related travel is not the same for a 'car' as it is for a 'commercial vehicle'. For example, travel to and from work is generally not considered work related for a 'car', though it is for a 'light commercial'.

If the vehicle is eligible for FBT exemption, but you use the vehicle outside the private use limitation, you will be deemed to have a residual benefit and will have to pay tax on the portion of use which is not work-related. In this case you either need a good estimate of use, or logs.


Vehicles tend to fall into three categories for the purposes of FBT:
A) Vehicles which have a gross payload of over one tonne, which are eligible for FBT exemption
B) Vehicles which have a gross payload of less than one tonne, but were not principally designed to carry passengers, which are eligible for FBT exemption
C) Vehicles which are classified as cars, which are subject to FBT as they are a 'car fringe benefit'

Note that I said elegible in (A) and (B). They do not automatically attract an FBT exemption. Whether or not they are exempt depends on how the vehicle is used. That is, how much of the use of the vehicle is work-related.

The definition of work-related is the same for (A) and (B), but not (C).

If the work-related portion of use of an (C) is 100% there is no FBT to pay. Otherwise, you must pay FBT on the private use portion. For a (C) work-related use does not include travel to and from work.

For (A) and (B) work-related use includes travel to and from work. Private use of the vehicle outside of work-related use is a residual benefit, on which tax is also payable. This is not FBT. FBT does not apply in this case. You also do not need to keep logs, only an estimate of private use percentage, though obviously logs will make this easier.

This tax issue is not clear, not obvious and easy to get wrong. The tax rulings are the best place to go to figure out whether or not you can claim and exemption, or a work-related FBT reduction.

As has been stated by many before, if unclear see an accountant. If unhappy, see another one. Rinse and repeat.

[vxberwag]

If there are people claiming that their Ute’s are 100% used for work why aren’t the company they work for providing them. I think it would be unreasonably to expect an employee to salary sacrifice for a vehicle if that vehicle was genuinely 100% used for work.

[Grant]

the ruling MT2024 is actually about which cars are eligble for the exemption

MT2024 (http://law.ato.gov.au/atolaw/view.htm?basic=+mt%202024&&docid=MTR/MT2024/NAT/ATO/00001) is a clarification of:
"FRINGE BENEFITS TAX : DUAL CAB VEHICLES ELIGIBILITY FOR EXEMPTION WHERE PRIVATE USE IS LIMITED TO CERTAIN WORK-RELATED TRAVEL"

In forrestd's case, it explicity allows his vehicle to be FBT free. But, it also clarifies the definition of 'not principally designed to carry passengers'. Check it out.

[sloone]

If there are people claiming that their Ute’s are 100% used for work why aren’t the company they work for providing them. I think it would be unreasonably to expect an employee to salary sacrifice for a vehicle if that vehicle was genuinely 100% used for work.
vxberwag,
I can novationally lease a vehicle, currently a VX SS sedan, on which I pay FBT approx $6,000 a year. I f I did the same with a SS ute of the same value I would only have to pay $2,400 odd in extra income tax and pocket the other $2,600. As they say better in my pocket than John Howards. Primary use for either vehicle is travelling to and from work which is why I will be trying to go this route in 3 years.
As to why some people lease their own car versus a company car, the company I work for provides some people with either a car or an allowance, so why not take the companies money and put it towards your own car and get a tax deduction to boot.

[jneil]

This is kind of confusing to me!

I have a Fully Maintained Operational Lease, my vehicle, an 04 VYII SS 6M, does not attract any FBT (the price of it was about $38000 with a leccy sunroof instead of the $52000rrp). I don't use it at all for business (0% business use), I DO have to pay FBT though in my package based on the 25000+ km per year that I do. I also package $4k of fuel and $1k of insurance. This all comes out with before tax money, and reduces my taxable income by the amount of the car package...there is, however, a seperate FBT figure on my group certificate (in the top right hand corner).

I don't have to keep any log books as it is used 0% for business..purely pleasure :burnout:

The only thing that I was aware of with utes, is if it is over 1 tonne.

A slightly :confused: Jeff.

[LSX-438]

This is kind of confusing to me!

I have a Fully Maintained Operational Lease, my vehicle, an 04 VYII SS 6M, does not attract any FBT (the price of it was about $38000 with a leccy sunroof instead of the $52000rrp). I don't use it at all for business (0% business use), I DO have to pay FBT though in my package based on the 25000+ km per year that I do. I also package $4k of fuel and $1k of insurance. This all comes out with before tax money, and reduces my taxable income by the amount of the car package...there is, however, a seperate FBT figure on my group certificate (in the top right hand corner).

I don't have to keep any log books as it is used 0% for business..purely pleasure :burnout:

The only thing that I was aware of with utes, is if it is over 1 tonne.

A slightly :confused: Jeff.

Hi Jeff,

if you read MT2024 and everything posted here it should be clear this is about an FBT exemption for dual cabs/utes when used for work-related use. Theory being they are not designed to carry passengers thus the fringe benefit is dimished, amongst other things. And 'work related' being redefined to include 'private' travel to and from work .

FWIW and OT, you get a discount on your FBT because you travel 25,000km... why do you think the FBT discount increases as your k's do? because higher numbers of k's implies larger proportion business use, thus less fringe benefit, even though you never use it for business... work that out.

[jneil]

Hi Jeff,

if you read MT2024 and everything posted here it should be clear this is about an FBT exemption for dual cabs/utes when used for work-related use. Theory being they are not designed to carry passengers thus the fringe benefit is dimished, amongst other things. And 'work related' being redefined to include 'private' travel to and from work .

FWIW and OT, you get a discount on your FBT because you travel 25,000km... why do you think the FBT discount increases as your k's do? because higher numbers of k's implies larger proportion business use, thus less fringe benefit, even though you never use it for business... work that out.

Yeah, but why do I get FBT exempt on my SEDAN, for 0% work use?? Surely I wouldn't qualify for it?? I know about the km stuff...perhaps it's a government thing as I work at a Uni?? My car is exempt, but I am not.

Anyway, I don't wanna take this OT as mine is probably a different type of situation all together. Thanks for the response though.

Jeff.

[LSX-438]

Yeah, but why do I get FBT exempt on my SEDAN, for 0% work use?? Surely I wouldn't qualify for it?? I know about the km stuff...perhaps it's a government thing as I work at a Uni?? My car is exempt, but I am not.

Anyway, I don't wanna take this OT as mine is probably a different type of situation all together. Thanks for the response though.

Jeff.

oh sorry you work for a govt. department? yes different kettle there. You probably get a FBT exemption on that basis. btw regular office workers get FBT discounts if they travel higher k's under a novated lease etc. Despite all travel being private.

[clixanup]

Yeah, but why do I get FBT exempt on my SEDAN, for 0% work use?? Surely I wouldn't qualify for it??

You don't.

This is verified by the RFBT amount in the top r/h corner of your PAYG Summary (group cert).

If there is a figure in that little box, FBT is being paid for your car.

I think the thing that is confusing you is that FBT is a tax on your employer, not yourself. Some employers deduct the amount from the employees' pay packet, which is a big part of the confusion here.

If anyone wants professional advice on this, please PM me.

[clixanup]

Clixanup, are you saying that where a vehicle has a load capacity of 1 tonne or more then it automatically follows it is exempt?

Yes - under Division 2, ss.7-13 of the FBTAA.


Also why the distinction for weekends? Surely if you use it for non-work-related use on other days then the exemption doesnt apply.

Ahh literal interpretation..... Of course, it also applies where the vehicle is available for private use at ANY time. Weekends were just an example.

[LSX-438]

Yes - under Division 2, ss.7-13 of the FBTAA.
thanks. do you know where i could find an online reference to that?

edit: so i think you're saying there is no passenger vs non-passenger car distinction required for one-tonne+ utes is that right? presumably the other "work related use" requirements apply if you want reduced/exempted FBT.

[MalooR8]

2. Is your ute available for private use on the weekends? If yes, FBT applies to the private use portion.

This is misleading as you can use your ute on weekends for non-work-related use that is minor, infrequent and irregular. The ATO also doesn't provide any guidelines for what is minor, infrequent and irregular this is open to the interpretation of individual accountants.

Nor can the ATO prove what is minor, infrequent and irregular as for a vehicle that FBT isn't applicable on as your not required to keep any log books.

If your that worried about it pay for some petrol out of after tax income and apply that against what you may perceive is use that warrants FBT.

[clixanup]

thanks. do you know where i could find an online reference to that?

http://www.austlii.edu.au/au/legis/cth/consol_act/fbtaa1986312/

[Grant]

Here is the relevant FBT section (8):
FRINGE BENEFITS TAX ASSESSMENT ACT 1986 - SECT 8
Exempt car benefits

(1)
Except insofar as section 7 provides that the application or availability of a car held by a person is a benefit, the application or availability of a car held by a person is an exempt benefit.

(2)
A car benefit provided in a year of tax in respect of the employment of a current employee is an exempt benefit in relation to the year of tax if:

(a) the car is:
(i) a taxi, panel van or utility truck, designed to carry a load of less than 1 tonne; or
(ii) any other road vehicle designed to carry a load of less than 1 tonne (other than a vehicle designed for the principal purpose of carrying passengers); and
(b) there was no private use of the car during the year of tax and at a time when the benefit was provided other than:
(i) work-related travel of the employee; and
(ii) other private use by the employee or an associate of the employee, being other use that was minor, infrequent and irregular.

(3)
Where:

(a) a car benefit relating to a particular car is provided by a particular person (in this subsection called the provider ) in a year of tax in respect of the employment of a current employee of an employer;
(b) at all times during the year of tax when the car was held by the provider, the car was unregistered; and
(c) during the period in the year of tax when the car was held by the provider, the car was wholly or principally used directly in connection with business operations of:
(i) the employer; or
(ii) if the employer is a company—the employer or a company that is related to the employer;

the car benefit is an exempt benefit in relation to the year of tax.

(4)
A car benefit is an exempt benefit in relation to a year of tax if:

(a) the car benefit is provided in the year of tax in respect of the employment of a current employee; and
(b) the person providing the benefit cannot deduct an amount under the Income Tax Assessment Act 1997 for providing the benefit because of section 86-60 of that Act.
Note: Section 86-60 of the Income Tax Assessment Act 1997 (read together with section 86-70 of that Act) limits the extent to which personal service entities can deduct car expenses. Deductions are not allowed for more than one car for private use.


Relevant Residual Benefit Section (47):
(6)
Where:

(a) a residual benefit consisting of the provision or use of a motor vehicle is provided in a year of tax in respect of the employment of a current employee;
(aa) the motor vehicle is not:
(i) a taxi let on hire to the provider; or
(ii) a car, not being:
(A) a panel van or utility truck; or
(B) any other road vehicle designed to carry a load of less than 1 tonne (other than a vehicle designed for the principal purpose of carrying passengers); and
(b) there was no private use of the motor vehicle during the year of tax and at a time when the benefit was provided other than:
(i) work-related travel of the employee; and
(ii) other private use of the motor vehicle by the employee or an associate of the employee, being other use that was minor, infrequent and irregular;

the benefit is an exempt benefit in relation to the year of tax.

[Grant]

This is interesting. Dual cabs are a special case. The method of determining whether or not a vehicle was principally defined for carrying passengers is different for vehicles other than dual cabs (and subjective):

Definition of “not principally designed to carry passengers” (TD 93/D270)
Draft Taxation Determination (website says final?).

Fringe benefits tax: is the method outlined in Taxation Ruling MT 2024 appropriate for determining whether a vehicle, other than a dual or crew cab, is "designed for the principal purpose of carrying passengers" and thereby ineligible for the work-related use exemption available under subsection 8(2) of the Fringe Benefits Tax Assessment Act 1986?

Preamble
1. No. The method outlined in paragraphs 14 to 16 of MT 2024 only applies to dual cab or crew cab vehicles. According to that method, if the majority of the load carrying capacity of the dual or crew cab is attributable to passenger carrying capacity, then it is taken to have been designed for the principal purpose of carrying passengers, regardless of any other considerations.

2. In coming to a conclusion as to the principal purpose for which any other vehicle was designed, regard should be had to factors including, but not limited to, the following:
· the appearance and presentation of the vehicle
· any relevant promotional literature
· the emphasis evident in marketing
· the vehicle's specifications
· load carrying capacity
· passenger carrying capacity

3. In any event, the exemption provided in subsection 8(2) will only apply where, during the year, private use of the car is limited to:
· work-related travel of the employee, and
· other private use which is minor, infrequent and irregular.

Example
ABC Pty Ltd purchased a new four wheel drive station wagon for the business. The office manager of the company, Rob, is allowed to use the car for home to work travel.
The vehicle has seating for 5 passengers and has a load carrying capacity of 865 kgs. Promotional literature for the vehicle emphasises its level of passenger comfort, off-road capability and "sporty" features. Little reference is made to its capacity to carry a load. It has very little room to carry anything other than luggage or tools. It is clear from the promotional literature and the vehicle's specifications that it is designed principally for carrying passengers. Any private use of the vehicle by Rob, including home to work travel, will be subject to fringe benefits tax.

[Nawdy]

This is interesting. Dual cabs are a special case. The method of determining whether or not a vehicle was principally defined for carrying passengers is different for vehicles other than dual cabs (and subjective):

Definition of “not principally designed to carry passengers” (TD 93/D270)
Draft Taxation Determination (website says final?).

Fringe benefits tax: is the method outlined in Taxation Ruling MT 2024 appropriate for determining whether a vehicle, other than a dual or crew cab, is "designed for the principal purpose of carrying passengers" and thereby ineligible for the work-related use exemption available under subsection 8(2) of the Fringe Benefits Tax Assessment Act 1986?

Preamble
1. No. The method outlined in paragraphs 14 to 16 of MT 2024 only applies to dual cab or crew cab vehicles. According to that method, if the majority of the load carrying capacity of the dual or crew cab is attributable to passenger carrying capacity, then it is taken to have been designed for the principal purpose of carrying passengers, regardless of any other considerations.

2. In coming to a conclusion as to the principal purpose for which any other vehicle was designed, regard should be had to factors including, but not limited to, the following:
· the appearance and presentation of the vehicle
· any relevant promotional literature
· the emphasis evident in marketing
· the vehicle's specifications
· load carrying capacity
· passenger carrying capacity

3. In any event, the exemption provided in subsection 8(2) will only apply where, during the year, private use of the car is limited to:
· work-related travel of the employee, and
· other private use which is minor, infrequent and irregular.

Example
ABC Pty Ltd purchased a new four wheel drive station wagon for the business. The office manager of the company, Rob, is allowed to use the car for home to work travel.
The vehicle has seating for 5 passengers and has a load carrying capacity of 865 kgs. Promotional literature for the vehicle emphasises its level of passenger comfort, off-road capability and "sporty" features. Little reference is made to its capacity to carry a load. It has very little room to carry anything other than luggage or tools. It is clear from the promotional literature and the vehicle's specifications that it is designed principally for carrying passengers. Any private use of the vehicle by Rob, including home to work travel, will be subject to fringe benefits tax.

Ok, so would this apply to a Crewman SS M6? According to the calculation method the ATO have supplied, this car would also be FBT exempt:

Gross mass - 2535kg
Kerb weight - 1785kg
Payload capacity - 750
Seating capacity 5 x 68kg (as per para 15) - 340 which is less than 1/2 of 750kg, so therefore is considered a principally load carrying vehicle.

Tech specs from here: http://www.holden.com.au/www-holden/action/techdata?modelid=23002

Also (from my calculations which are a little rough and ready), the Cross 8 would also fall into this category (just):

Gross mass - 2685kg
Kerb weight - 1947kg
Payload capacity - 738kg
Seating capacity 5 x 68kg - 340 which is less than 1/2 of the payload capacity.

Tech specs from here: http://www.holden.com.au/www-holden/action/techdata?modelid=23003

If I am correct, then I would consider a Cross 8 for sure.

The ATO seem to rely on personal honesty a fair bit (from my interpretation of this thread), but I can't see how they can actually check up on you....

[Grant]

Ok, so would this apply to a Crewman SS M6? According to the calculation method the ATO have supplied, this car would also be FBT exempt:

Gross mass - 2535kg
Kerb weight - 1785kg
Payload capacity - 750
Seating capacity 5 x 68kg (as per para 15) - 340 which is less than 1/2 of 750kg, so therefore is considered a principally load carrying vehicle.

Tech specs from here: http://www.holden.com.au/www-holden/action/techdata?modelid=23002

Also (from my calculations which are a little rough and ready), the Cross 8 would also fall into this category (just):

Gross mass - 2685kg
Kerb weight - 1947kg
Payload capacity - 738kg
Seating capacity 5 x 68kg - 340 which is less than 1/2 of the payload capacity.

Tech specs from here: http://www.holden.com.au/www-holden/action/techdata?modelid=23003

If I am correct, then I would consider a Cross 8 for sure.

The ATO seem to rely on personal honesty a fair bit (from my interpretation of this thread), but I can't see how they can actually check up on you....

You should always get professional advice on such matters. I can only give my opinion based on my interpretation of the tax law.

In short though, yes. Crew cabs are a special case, explicitly exempt and clarified under MT2024.

Forrestd has a FBT exemption on a Crewman SS - send him a PM.

[LSX-438]

FYI guys, Ernst and Young auditors just went though our place and looked very closely at this novated lease arrangement with respect to MT2024 and my setup. All passed, no problem.

[Clancy]

I looked at the eligibilty criteria for this exemption this week and just salary sacrificed a $52k twin cab with all the bells 'n whistles. This should result in $3K more in the hand than if I had kept my current aged car (equivalent to a $6K pay rise without doing much) .

The way I did this was:
- found a fleet management company that services a "fleet" containing as little as one car
- checked my eligibility with them, and signed up for their full service
- as I pay the bills I'm happy to leave the administration of the vehicle up them
- one automatic payment is made to them for all car expenses each month
- they give me a report for any tax obligations and do any reconciliations (if I drive more or less than expected) at the end of the year
- I get on with more interesting stuff (like driving my ute the long way to and from work and to work sites)

I'm now offering car salary sacrificing to all employees. However it's very important to note that the other employees aren't eligible for the full exemption from FBT because their particular circumstances are different to mine. Herein lies the point, everyone's circumstances are different and the tax rules apply differently to each individual.

With this in mind:
- find a professional specialised in this particular field who doesn't charge like a wounded bull so they can apply the rules to your particular circumstances
- arrange for a fleet management company to do all the administration for your employer

Any employer worth working for should be happy to do this for their employees.

[Wayne@GM Motorsport]

I know this is an old thread but I was reading through it yesterday and was interested in if I could qualify, emailed my accountant and this is what he came up with.

--------------------------------------------------------------------------

One thing to be careful about is not to many vehicles are FBT exempt in total, there are normally conditions attached to those exemptions. Many people perceive utes to be exempt that is not always the case, they are only exempt id certain conditions are met and satisfied. The other factor is that the ATO are a bunch of pricks and just because the car may not be taxable as a motor vehicle fringe benefit it doesn't mean that it's not subject to FBT under another category.

Further many people don't understand the FBT rules and often think that they are exempt from FBT when infact they may not. Finally on size does not fit all. Each person will be different depending on the facts.

Broadly a car benefit arises where all of the following requirements have been satisfied.

a) A Car is provided to an employee or associate
b) The car is held by a provider (i.e. employer)
c) The car is either applied or deemed to be available for private use of an employee or associate.

The catch is, if not all the above conditions apply is does not necessarily mean the car is not subject to FBT. What the act says is that if the above conditions are not satisfied it is then not a motor vehicle fringe benefit, it can however be what is termed a residual fringe benefit or one of the other 10 FBT categories.

The next thing is to determine what is the definition of a car?

A car is defined under Sec 136 (1) of the FBT Act to represent any motor vehicle (including 4 wheel drives) being

a) a motor car station wagon, panel van, utility or similar vehicle designed to carry a load of less than 1 tonne; or
b) any other road vehicle designed to carry a load of less than one tonne or fewer than 9 passengers

But does not include a motor cycle.

From that is a ute defined as a car?

Emphasis needs to be placed on the bold words above being "or". Simply a ute regardless of the fact that it may carry more or less than one tonne caries less than 9 passengers, this is one of the greatest misconceptions. The ATO can still classify utes as a vehicle subject to FBT regardless of the carrying capacity as they carry less than 9 passengers.

Basically their are two main exemptions being:

Section 47(6) & Section 8(2).

FBT exemption for motor vehicles not considered cars - Sec 47(6)

Where the vehicle provided is not a car (i.e. a motor vehicle, station wagon designed to carry a load of 1 tonne or more) it will be exempt from FBT provided that the use of the vehicle is limited to:

Travel by the employee between:
- the place of residence of the employee, and
- the place of employment of the employee or any other place from which or at which the employee performs duties of his or her employment; or

travel by the employee that is incidental to travel in the course of performing the duties of his or her employment; or
other private use of the motor vehicle by the employee or an associate of the employee, which is minor, infrequent and irregular.

Travel/use of the car outside the above guidelines means that the car is not exempt from FBT.

Further, the problem with the above is the ATO has not defined what is meant by minor, infrequent and irregular.

Certainly you are not meant to take a trip/holiday and take the ute. This is very simply outside the exemption being granted by the ATO.

The problem you can see is the car/ute > 1 tonne is exempt from FBT if it meets the above points. If the ATO determines/decides you are not within the above points they can assess the car as being subject to FBT.

Would the ATO assess you as being subject to FBT?

The biggest trap people fall into is they don't think about it before they go ahead and do it. For instance take a single bloke who is not married has no girl friend. Does the guy have his own vehicle? If not how does he travel around on weekends if he hasn't got a second vehicle? Has he had speeding parking fines outside work hours/on weekends. The ATO are very cunning. If they want to screw you they can and most likely will.

The second exemption is commercial vehicles Section 8(2)

A further exemption applies for a vehicle that is a car for FBT purposes. This exemption is limited to the following types of cars:

a taxi, panel van or utility truck, designed to carry a load of less than 1 tonne; or
any road vehicle designed to carry a load of less than 1 tonne (other than a vehicle designed for the principal purpose of carrying passengers)

The FBT exemption is also contingent upon the actual use of the car. For the FBT exemption under Section 8(2) of the FBT Act to apply, the use of the car (as mentioned above) must be applied to the same use (eg home to work) as mentioned above under Section 47(6).

The other major factor that people forget is that if you are using either of the above exemptions i.e. section 47(6) or 8(2) the employee is meant to sign a declaration to that effect. So many people ignore this and the exemptions do not apply from the start. Further if people do sign the declaration are they willing to stand by it in a court of law knowing that they may just in fact commit purgary?

-------------------------------------------------------------------------

So basicly what he told me is I could go ahead with a SS Ute as long as I am prepared and able to prove that I only use the ute for work.

[angel82]

I know this is an old thread but I was reading through it yesterday and was interested in if I could qualify, emailed my accountant and this is what he came up with.

--------------------------------------------------------------------------

One thing to be careful about is not to many vehicles are FBT exempt in total, there are normally conditions attached to those exemptions. Many people perceive utes to be exempt that is not always the case, they are only exempt id certain conditions are met and satisfied. The other factor is that the ATO are a bunch of pricks and just because the car may not be taxable as a motor vehicle fringe benefit it doesn't mean that it's not subject to FBT under another category.

Further many people don't understand the FBT rules and often think that they are exempt from FBT when infact they may not. Finally on size does not fit all. Each person will be different depending on the facts.

Broadly a car benefit arises where all of the following requirements have been satisfied.

a) A Car is provided to an employee or associate
b) The car is held by a provider (i.e. employer)
c) The car is either applied or deemed to be available for private use of an employee or associate.

The catch is, if not all the above conditions apply is does not necessarily mean the car is not subject to FBT. What the act says is that if the above conditions are not satisfied it is then not a motor vehicle fringe benefit, it can however be what is termed a residual fringe benefit or one of the other 10 FBT categories.

The next thing is to determine what is the definition of a car?

A car is defined under Sec 136 (1) of the FBT Act to represent any motor vehicle (including 4 wheel drives) being

a) a motor car station wagon, panel van, utility or similar vehicle designed to carry a load of less than 1 tonne; or
b) any other road vehicle designed to carry a load of less than one tonne or fewer than 9 passengers

But does not include a motor cycle.

From that is a ute defined as a car?

Emphasis needs to be placed on the bold words above being "or". Simply a ute regardless of the fact that it may carry more or less than one tonne caries less than 9 passengers, this is one of the greatest misconceptions. The ATO can still classify utes as a vehicle subject to FBT regardless of the carrying capacity as they carry less than 9 passengers.

Basically their are two main exemptions being:

Section 47(6) & Section 8(2).

FBT exemption for motor vehicles not considered cars - Sec 47(6)

Where the vehicle provided is not a car (i.e. a motor vehicle, station wagon designed to carry a load of 1 tonne or more) it will be exempt from FBT provided that the use of the vehicle is limited to:

Travel by the employee between:
- the place of residence of the employee, and
- the place of employment of the employee or any other place from which or at which the employee performs duties of his or her employment; or

travel by the employee that is incidental to travel in the course of performing the duties of his or her employment; or
other private use of the motor vehicle by the employee or an associate of the employee, which is minor, infrequent and irregular.

Travel/use of the car outside the above guidelines means that the car is not exempt from FBT.

Further, the problem with the above is the ATO has not defined what is meant by minor, infrequent and irregular.

Certainly you are not meant to take a trip/holiday and take the ute. This is very simply outside the exemption being granted by the ATO.

The problem you can see is the car/ute > 1 tonne is exempt from FBT if it meets the above points. If the ATO determines/decides you are not within the above points they can assess the car as being subject to FBT.

Would the ATO assess you as being subject to FBT?

The biggest trap people fall into is they don't think about it before they go ahead and do it. For instance take a single bloke who is not married has no girl friend. Does the guy have his own vehicle? If not how does he travel around on weekends if he hasn't got a second vehicle? Has he had speeding parking fines outside work hours/on weekends. The ATO are very cunning. If they want to screw you they can and most likely will.

The second exemption is commercial vehicles Section 8(2)

A further exemption applies for a vehicle that is a car for FBT purposes. This exemption is limited to the following types of cars:

a taxi, panel van or utility truck, designed to carry a load of less than 1 tonne; or
any road vehicle designed to carry a load of less than 1 tonne (other than a vehicle designed for the principal purpose of carrying passengers)

The FBT exemption is also contingent upon the actual use of the car. For the FBT exemption under Section 8(2) of the FBT Act to apply, the use of the car (as mentioned above) must be applied to the same use (eg home to work) as mentioned above under Section 47(6).

The other major factor that people forget is that if you are using either of the above exemptions i.e. section 47(6) or 8(2) the employee is meant to sign a declaration to that effect. So many people ignore this and the exemptions do not apply from the start. Further if people do sign the declaration are they willing to stand by it in a court of law knowing that they may just in fact commit purgary?

-------------------------------------------------------------------------

So basicly what he told me is I could go ahead with a SS Ute as long as I am prepared and able to prove that I only use the ute for work.


I'm an accountant, and used to do a lot of FBT work, that is probably the most accurate answer I have seen in this thread. :) There is always going to be risks with defrauding the system, chances are you will get away with it, as they generally have bigger fish to fry, then the average Joe Bloggs, but they are slowly cracking down on GST and FBT and have approx 40million allocated I think from the last NTAA seminar I went to, to audit all these people.

[Ako]

The best way to check your circumstance is to write a letter directly to the ATO (I think you did this Forrestd?) and get your situation approved.

I attented the NTAA seminar on FBT last Friday (angel82, maybe the same one at the Hilton?) and this is one area they stressed the ATO is going to crack down on in a big way.

Another intresting idea they put forward in the seminar, and it is perfectly legal, if for those couples who only have a single income earner.

What they proposed is that the non-income earner purchase the vehicle and they lease it to the company for whom the income earner works. This sounds very funny, but once explained made loads of sense.

Say your wife doesn't work. She finds a vehicle and manages to lease it at 5.5%. She then draws up a lease to "Company A" to whom her husband works for at 5.7%. The compny then ties this lease into her husbands salary package. Now the Wife is going to receive the lease payments and make them directly to whom she leases the car off, but she will be able to claim depreciation on the vehicle, thus reducing her income. Oh I am not making this clear.

But I have the paperwork to prove this makes money. If anyone wants a copy let me know.

Ako. (also an accountant unfortuntely, but at least in private practice).

[clixanup]

Ako. (also an accountant unfortuntely, but at least in private practice).

Ummm... don't you mean public practise? Unless you're a tax agent for the government??

[angel82]

I've attended the FBT Seminar at the Hilton the last two years, but having left chartered life to venture into the commercial sides of things, I didn't get to attend this year's seminar.

Would be interested to hear the way the spouse leasing the car works?

[Ako]

Ummm... don't you mean public practise? Unless you're a tax agent for the government??

No private, I work for a very large privately owned company in North QLD.

angel82, if you PM your e-mail address i will scan in the pages from the book we were given this year and e-mail them too you, its quite smart actually.

[lxhatch]

WOW...What a read all that was :bash:

Sly is spot on.
We went to the "insert name of extremely high profile accountant firm" seminar in Brissie last week.
All those dudes out there (and I know a few of them) who paid $85k + on those F250, F350 utes and crewcabs - simply to avoid FBT - should be shaking in their boots.
When audited by tax department - you are guilty til proven innocent. I'm not going to go on with a 1000 word explanation other than to say that if they want to get you - you'd better have a good lawyer son.
They will come from the angle that the sole purpose of your actions is to AVOID tax. People keep saying that accountants dont understand the laws - this is partly true but only because the laws are so loose and simply open to interpretation - he who can afford the best lawyer WINS.

You throw a few curly questions in at these seminars and all of a sudden the senoir partner fbt expert starts contradicting himself - thus validating Sly's response.

Sleep well people :)

[LSX-438]

i had a different answer for just about every professional i spoke to. call the tax office & get the supporting letter for your situation, simple.

[lxhatch]

and to that, said guru explained that those private rulings are no more than guides, in court they are worthless and can be reversed at anytime. You have shown that you want to do the right thing - they will simply go easy on you in that they will not hit you with all the penalties, they will just ask kindly for the tax they've missed out on for X amount of years. Now these gurus are the blokes we rely on to defend our position, when they cant agree amongst them selves, where does it leave us :mad: I cant recall how many pages the tax laws are now including court judgements - tax dept will know where there is a precedent to use and apply same.

Incidentally, the tax dept website has just been overhauled extensively. Some of the info that we used to refer to on these matters has vanished. Rulings that were given 18mths ago will not necessarily be given today. :eek:

[angel82]

and to that, said guru explained that those private rulings are no more than guides, in court they are worthless and can be reversed at anytime. You have shown that you want to do the right thing - they will simply go easy on you in that they will not hit you with all the penalties, they will just ask kindly for the tax they've missed out on for X amount of years. Now these gurus are the blokes we rely on to defend our position, when they cant agree amongst them selves, where does it leave us :mad: I cant recall how many pages the tax laws are now including court judgements - tax dept will know where there is a precedent to use and apply same.

Incidentally, the tax dept website has just been overhauled extensively. Some of the info that we used to refer to on these matters has vanished. Rulings that were given 18mths ago will not necessarily be given today. :eek:

lxhatch...i take it you are an accountant too?

[LSX-438]

i knew someone would say the advice from the tax office is worthless. in the end talk to your accountant, or several, if you get ambiguous answers (I guarantee it with this one) call the tax office and get something in writing, which will limit the penalties if you come unstuck later, as indicated. this is the very best anyone can hope for.

[COSMOS]

i just read the last 11 pages in one sitting - its 1130pm and my baby has just gone to sleep. this has been a fascinating read and a great way to calm down from all his screaming.

if you think these tax laws are frustrating you should try changing a nappy in the dark - getting it almost on and then he lets go with the water canon all over the new nappy, his clothes, his head and the bedlinen.

in all seriousness, and slightly OT i know... i am thinking of getting out of my lease (am 1 year through it next week) of a VYII SS and probably getting something LS1 but cheaper to own and run. Was thinking either an SV8 (late 03 series II) or a VY I or II SS ute, either with less than 30,000klms on the clock.

From reading this i could get the ute and if i the info here is correct i could legitimately only drive it to work and back and do some infrequent irregular or whatever driving of it on the weekend. I would genuinely use our other car (new vectra) as the family car as its got the baby seat in it and really now i dont drive the SS that much. Have been going to Canberra once a week to get the k's up above 25000 so i dont get slogged with extra fbt (its already 4k per year).

WHat are ppls thoughts about getting out of a 3 year novated lease after 1 year. Its a comprehensive lease (fuel, tyres, service, rego, insurance etc etc) with a 22k residual.

I should add that i would use the ute for lots of load carrying work - just most of it garden and house related. Also it wouldnt go a lot more than 7000-10000 klms a year as i now work from home 4 out of 5 days a week. The benefit of being fbt exempt is that these low kays wont matter. the other benefit is the running costs for such low kays would be very reasonable but i would still enjoy having a kick in it as needed.

Did I mention the other benefit - probably slap some 18 or 19" rims on it, edit, lowered, exhaust, satnav/dvd and end up with a nice work cruiser.

Bring on the op-ed
t

[LSX-438]

Tony i've helped a few subsequent people go through this, and by far the biggest hurdle is the HR/Packaging people (for a novated situation) there is almost nobody i came across who will submit to believing you can get a vehicle FBT free, regardless of the constraints, it just doesnt compute, they all went out of their way to find reasons why it cannot happen (mostly invalid) until I got the ATO involved. I'm not sure i would do it again they HR people still really refuse to believe it.

Getting out of a 3 year lease, their early termination fee will probably be quite large, a few months rental.

[COSMOS]

so youre saying i am better staying in the lease for another 2 years and then selling up for a slight return at end of lease Yr3(assuming the car is worth >22k with 75k klm on the clock).

Re early exit - i expected it to be costly to get out but my biggest concern is being able to offload the car - or do i just give it back to the lease company and pay the few months penalty charges/.

[LSX-438]

a few issues there but it sounds like you would be in the money probably, but i wouldnt keep it for an extra 2 years anticipating a few $k in the black, if you know what i mean. Add up the monthly rentals, insurance, petrol, maintenance for all remaining months, versus your proposed scenario for whatever new car and take it from there i reckon. pm sent too.

[Merlin]

What a good read - I was up last night printing out all the legal mumbo jumbo and am taking it to my accountant when I get a chance - its worth a shot at least.

[RICHO]

And remember whatever option you choose, keep "evidence"..not that I would suggest doing something illegal or misleading...

But receipts and a log book can clearly "show" that 80+% of your mileage was business related (whether true or not).

Just make sure you understand the evidence you are required to keep by the ATO. And ATO audit or desk audit is nothing to be scared of provided you have kept records and can substantiate your claim(s)

Fantastic thead BTW

[clixanup]

and to that, said guru explained that those private rulings are no more than guides, in court they are worthless and can be reversed at anytime.

Mate, that is just blatantly wrong.

Under Part IVAAA of the Tax Administration Act 1953 private rulings are legally binding on the Commissioner.

If you don't believe me, you can read the legislation for yourself here:

http://www.austlii.edu.au/au/legis/cth/consol_act/taa1953269/

[angel82]

Mate, that is just blatantly wrong.

Under Part IVAAA of the Tax Administration Act 1953 private rulings are legally binding on the Commissioner.

If you don't believe me, you can read the legislation for yourself here:

http://www.austlii.edu.au/au/legis/cth/consol_act/taa1953269/

I havent read the legislation lately, or any relevant cases, but if my memory serves me correctly, and it has been a while, yes they are legally binding on the commissioner, but can be overturned by the High Court if the commissioner challenges it.

[clixanup]

I havent read the legislation lately, or any relevant cases, but if my memory serves me correctly, and it has been a while, yes they are legally binding on the commissioner, but can be overturned by the High Court if the commissioner challenges it.

Of course the High Court can overturn anything.

In practise, the Commissioner's rulings tend to be a conservative interpretation of the law. It is a rare circumstance that he would wish to withdraw a private ruling once issued.

Cost is a key factor to the FCT when deciding whether to prosecute. The ATO simply don't prosecute to make a point unless there is money in it. That is to say: they might succeed in making their point, but money is their first consideration.

To put it further into scale, since 1903 there have only been 16 FBT related cases decided by the High Court. Of those 16 cases precisely none were brought to the High Court by the FCT.

There is sufficient case law in place to ensure that the FCT can't just go changing his mind willy-nilly. To do so and then take the case to the High Court would end up costing them money more often than not.

[SSBarney]

and to that, said guru explained that those private rulings are no more than guides, in court they are worthless and can be reversed at anytime. You have shown that you want to do the right thing - they will simply go easy on you in that they will not hit you with all the penalties, they will just ask kindly for the tax they've missed out on for X amount of years. Now these gurus are the blokes we rely on to defend our position, when they cant agree amongst them selves, where does it leave us :mad: I cant recall how many pages the tax laws are now including court judgements - tax dept will know where there is a precedent to use and apply same.

:

You have no idea, forget the conspiracy garbage, the workings of private rulings is in legislation.
Section 170BB of the ITAA states the effect of a private ruling on tax other than withholding tax. It says that the amount of tax payable will not be more than it would have been had the law applied in the way described in the ruling. By this mechanism a ruling binds the Commissioner to apply the law in that way.

What that means is that give all the details correctly to the ATO and a private ruling IS BINDING on the commissioner.

[lxhatch]

re-read the 1st 6 words you quoted. :)

edit: I welcome your info and that of clix'

[goldmine]

In response to those wanting to know about paying out leases early and additional costs. I first started salary packaging vehicles under financed novated leases, since 1998. I have moved vehicle leases between employers several times now. In fact I am about to do it again. I have re-financed the leases each time, where the new employers fleet packaging company pays out the existing lease then re-calculate the new salary packaging costs (running costs, etc).

Each time, I have been able to calculate the approximate payout figure and be within a few hundred dollars of the actual payout figure provided by the fleet mgnt company.

Remember your fleet management company can provide a payout figure any time. Generally it will be on the same day as the lease commencement date (27th of the month for me) and can be quoted a few months in advance. They assume the normal repayments will continue until that date.

I will be changing employers again soon and have arranged my payout figures as at 27 April 2005. This is how I calculate the approx payout figure and then you can see what the difference is when you get your payout figure.

You will need your original lease quote. It's better to convert all the lease details below into ex-GST amounts, since your employer is claiming the GST on these (and should be passing the discount to you). This is the exact dollar amounts for one of my vehicles (my lease is for 12 months):

27 July 2004 -> My lease start date
12 Months -> Lease term
$28,876.35 -> Vehicle Finance Cost (ex GST)
$18,769.62 -> 65% Residual Value after 12 Months (ex GST)
$13,897.44 -> Lease Finance Payments PA (ex GST)

The lease finance payments is only the finance component (which will include interest) and does NOT include running costs, insurance, management fee's, etc.

first, calc the difference between Purchase Price and Residual (ex GST). This will be the amount of money being paid off the cost of the vehicle over the term of the lease.
$28,876.35 - $18,769.62 = $10,106.73

Now divide this amount by the lease term in months (12 months for my lease).
$10,106.73 / 12 = $842.22 per month

Essentially I am paying off the vehicle $842 per month, the remainder is interest, etc. I am 9 months (at the quoted payout date) into the term of my lease. Now multiple the 9 months into the lease by the amount per month I am paying off the vehicle ($842.22 * 9) and take this away from the total amount being paid off the lease as above.

$10,106.73 - ($842.22 * 9) = $7579.88

Now take the financed purchase price of the vehicle (ex GST) and subtract the above amount from it. This should now calculate the approix ex GST amount owing on your vehicle as at your payout date.

$28,876.35 - $7579.88 = $21,296.47

Unfortunately, when you payout the vehicle GST must be included, so add the 10% GST. This now leaves me with an approx final payout figure (inc GST).

$21,296.47 *110% = $23,426.11

And guess what my actual payout figure is.........
My quoted payout figure as at 27 April 05 (9 months into the lease)
=$23,926.38

Difference = $500. I have never seen a lease agreement that states anything about an early termination fee. Perhaps it is $500 in my case????

To the people whom was thinking about paying out the vehicle early, why not try and calculate using this method, then get a payout figure. If you are considering changing from a non-FBT exempt vehicle to an FBT exempt vehicle, $500 is nothing compared to the amount you will save in FBT. I have done this several times when changing employers and never had any other payments to make. I always got several hundred dollars back when the vehicle expense reconciliation when through (I was well ahead in vehicle expenses). The important thing to remember is, if you are paying FBT you will need to give odometer readings at the payout date. ENSURE you are over the required amount (pro-rata). Assuming you travel 25,000kms ->
i.e. Minimum ODO reading = ((25000kms * (num days from 1 April to the payout date / 365days)) + odometer reading as 31 March).

By the way. My new employer welcomes FBT exempt vehicles.... Here comes my all new AUV Toyota HiLux SR5 dual-cab..... :) :) :)

[VYBerlinaV8]

I hereby declare myself a tax gumby. Now that's straight, would I be correct in saying:

1) If I am not a 'tradesman' and
2) The ute I want has a carrying capacity of two people but less than 1 tonne and
3) It will be driven to and from a variety of work sites (including my base office, which is NOT at my home)

THEN I will be FBT exempt IF I

1) Drive the ute between my home, my office and my clients (not always in that order) and
2) I don't use the ute as my regular personal / weekend drive.

Based on the info here, it seems to me that this would be correct (PLEASE CORRECT ME IF WRONG!!!!!).

I am an IT consultant, have a new baby on the way, use my VY Berlina V8 as family / wifemobile / weekend ride, and just want to use the ute for work, I should be in the clear, yeah??. I could keep a three month log book to verify my business usage (of course it will show very few trips between home and base office, mostly home to client, client to office, client to home).

Thanks to all the smart folk on here for putting this info up!

[clixanup]

would I be correct in saying:

1) If I am not a 'tradesman' and
2) The ute I want has a carrying capacity of two people but less than 1 tonne and
3) It will be driven to and from a variety of work sites (including my base office, which is NOT at my home)

THEN I will be FBT exempt IF I

1) Drive the ute between my home, my office and my clients (not always in that order) and
2) I don't use the ute as my regular personal / weekend drive.

Almost. The trip from home to office (and office to home) counts as personal travel UNLESS you stop at a client's place on the way thru. In that case the whole trip is business travel, so you're sweet.


I am an IT consultant, have a new baby on the way, use my VY Berlina V8 as family / wifemobile / weekend ride, and just want to use the ute for work, I should be in the clear, yeah??.

It doesn't need to be a ute. Sub 1 tonne utes are classed as cars by the ATO (i.e. not commercial vehicles), so you could also buy a normal sedan or station wagon.

Do you work for yourself or for a boss? If self employed, what sort of structure do you have in place?


I could keep a three month log book to verify my business usage (of course it will show very few trips between home and base office, mostly home to client, client to office, client to home).

Do it.

[VYBerlinaV8]

Thanks heaps for that.

I am aware that a trip between home and office is personal, so would need to conduct most of the trips via a client - at least that's what the log book needs to say.

I am not self employed - a regular employee of a small professional firm.

Also, the choice of ute is to add to the non-FBT case if and when I'm audited. As is the log book.

Does anyone know if you can get the standard styleside Holden Ute with 1 tonne suspension?

[LSX-438]

Almost. The trip from home to office (and office to home) counts as personal travel UNLESS you stop at a client's place on the way thru. In that case the whole trip is business travel, so you're sweet.


what about MT2024 and the sections driving to and from home

[clixanup]

what about MT2024 and the sections driving to and from home
I'd be surprised if an IT consultant could make MT2024 stick regardless of the type of vehicle. That is why he needs to show "stop offs" at clients' premises on the way to the office and then on the way home in his log book.

By my understanding of it, MT2024 is geared towards tradesmen who drive vehicles not capable of carrying a tonne.

[VYBerlinaV8]

While we're on the the topic of trips, what is necessary to be deemed an 'itinerant worker'. Can this be used in situations like mine where I routinely visit more than one client site in a day?

[LSX-438]

I'd be surprised if an IT consultant could make MT2024 stick regardless of the type of vehicle. That is why he needs to show "stop offs" at clients' premises on the way to the office and then on the way home in his log book.

By my understanding of it, MT2024 is geared towards tradesmen who drive vehicles not capable of carrying a tonne.
Of course you'd be surprised. Have you actually read MT2024? (it is the subject of this thread really) Clearly, at least in some situations, you dont need to visist clients to and from home to comply with MT2024. Your approach and contribution is the reason this thread is insanely complicated. MT2024 exists because all those general tax rules continuously sprouted do not cover every situation, exceptions exist which notionally override the technocratic vomit.

The fear uncertainty and doubt (FUD) continually raised here needs to be resolved either way. Therefore I will be taking a more explicit question to the ATO - ala the question posed by 'VYBerlinaV8' above - addressing all the FUD. Stay tuned.

[clixanup]

The fear uncertainty and doubt (FUD) continually raised here needs to be resolved either way. Therefore I will be taking a more explicit question to the ATO - ala the question posed by 'VYBerlinaV8' above - addressing all the FUD. Stay tuned.

Mate, if they tell you that an IT consultant can drive an employer supplied car (or ute which is not capable of carrying a tonne) directly between home and the office and not be subjected to FBT I'll sell my Holden and buy a Ford. :lol:

There is much more to this than MT2024 because MT2024 does not apply to everybody. That is what is confusing you. When it comes to cars, a tradesman can get away with a lot more than an office worker.

You're looking for a simple answer where there isn't one.

[clixanup]

While we're on the the topic of trips, what is necessary to be deemed an 'itinerant worker'. Can this be used in situations like mine where I routinely visit more than one client site in a day?

Yes.

The message you have entered is too short...

[LSX-438]

Mate, if they tell you that an IT consultant can drive an employer supplied car (or ute which is not capable of carrying a tonne) directly between home and work and not be subjected to FBT I'll sell my Holden and buy a Ford. :lol:

There is much more to this than MT2024 because MT2024 does not apply to everybody. That is what is confusing you. When it comes to cars, a tradesman can get away with a lot more than an office worker.

You're looking for a simple answer where there isn't one.

Let's agree to disagree. Naturally there is mre to FBT free vehicles than MT2024 but this thread and 90% of people reading it are concerned with MT2024, that is where YOU are confused, and in turn confusing the hell out of everyone.

[clixanup]

Let's agree to disagree. Naturally there is mre to FBT free vehicles than MT2024 but this thread and 90% of people reading it are concerned with MT2024, that is where YOU are confused, and in turn confusing the hell out of everyone.

Hey - VYBerlinaV8 asked a question. MT2024 doesn't apply to him. I simply answered his question in that context.

I didn't mean to upset or confuse anyone. :confused:

If you're still confused, find an accountant who can explain things based upon your own personal situation, because there are different rules for different circumstances.

But what would I know? I only deal with this sh1t on a daily basis...

[LSX-438]

Hey - VYBerlinaV8 asked a question. MT2024 doesn't apply to him. I simply answered his question in that context.

I didn't mean to upset or confuse anyone. :confused:

If you're still confused, find an accountant who can explain things based upon your own personal situation, because there are different rules for different circumstances.

But what would I know? I only deal with this sh1t on a daily basis...

Why doesnt MT2024 apply to him? you're saying that because he's not a tradesman?

[clixanup]

Why doesnt MT2024 apply to him? you're saying that because he's not a tradesman?

That is part of the reason, but we need to look at the big picture.

He's a "partially-itinerant" worker. ie: He drives to & from the office, but also visits clients. In his case, because he works from a central office, travel been home and the office is classed as private travel and is not exempted by MT2024. If he visits clients along the way, then the general provisions allow an exemption. He'd need a log book to substantiate this though.

The claim that an IT consultant needs a ute seems highly dubious. Most of the items he'd need to carry around (if any) would easily be carried in a normal sedan.

There could be more to it, but that is my summation about his particular situation from what he's written here so far.

Note that if he installed cabling and needed a van to carry ladders, tools and materials then MT2024 would apply regardless of his "partially-itinerant" status.

[LSX-438]

The claim that an IT consultant needs a ute seems highly dubious.This is the exact problem i had with several accountants, HR and salary packaging people regarding MT2024; all professionals doing this "sh1t on a daily basis". Thats why I (and at least 1 other here) had to go to the ATO, explain the situation (mine is similar to VYBerlinaV8) and get the answer in writing. Turns out their gut feelings on things being "dubious" were wrong. I know that sh!ts you no end, but there it is. How many times we have to address this point?

You've made a call that MT2024 doesn't apply to just about everyone here and offer alternative answers that bring up more questions than answers.

[clixanup]

You've made a call that MT2024 doesn't apply to just about everyone here and offer alternative answers that bring up more questions than answers.

OK. Firstly, thanks for making me work on the weekend. :D

So now that my head is clear, I've had a good look at this whole situation this morning and this is what I've come up with:

Ignoring the fact that an office worker doesn't need a ute, there will be no FBT on one provided they only use it for travelling between work, home and client's premises (not necessarily in that order). The travel between home & the office is actually exempted by the FBT Act (which I got wrong last night). So MT2024 doesn't even need to come into play, regardless of the type of vehicle.

If you do a lot of itinerant travel, it would be wise to keep a log book. Contrary to what I said previously, you don't need to stop off at a client's premises along the way for the trip to be FBT exempt. Also, you only need to keep the log book for 12 weeks in the first year. That log book can be used for 5 years before you'll need a new one.

MT2024 says that they can also use it for the odd private trip (eg: to the shops or to pick the kids up), but personally, I wouldn't do that too frequently. You could always show them as trips to visit clients in your log book I suppose. :hide:

I hope that clears things up for you. Please ignore my previous post answering VYBerlinaV8's question. This post contains what I now believe to be the correct answer.

[VYBerlinaV8]

Gents - thanks for all the discussion on this, I appreciate the time you've taken to discuss my situation. I agree with the last post - the approach I will take will be to demonstrate about 400kms a week (20000 a year) with a log book to back up my claim. If I occasionally do less than this amount of kms I will use the ute for a run to the tip. Ultimately, my next vehicle will be used almost solely for work purposes anyway. Also, I raised the issue with my employer last week and he said that if I had a letter from the ATO about my situation that they would not collect FBT, no problem! I guess sometimes the cards have to fall my way! :D

Thanks again!

[LSX-438]

our tax system is complicated, obviously. Lets keep this thread about MT2024 if at all possible. Read MT2024 and if you have a question about MT2024 by all means post it up. We could write to the end of time about general tax rules or situations surrounding FBT exempt cars etc, but in the end it gets too far off track. Please keep additional contributions to this thread related to MT2024. If you feel compelled to answer a question not directly relating to MT2024, send a pm.

[LSX-438]

As promised i sent this more explicit request to the tax office


Taxation Ruling MT2024 (and addendum MT2024A) lists specifc vehicles as FBT exempt where private use is limited to work related travel, including travel to and from work.

My questions are:

A) Is there any reason why a regular PAYE employee cannot undertake a novated lease for such a vehicle and obtain the FBT exemption, assuming they follow the private use requirements set out in the tax ruling?

B) Is there any distinction or significance relating to how the vehicle is used during business hours? For example; if a regular office worker, that does not require a Utility to fulfill duties, was to undertake a novated lease with a vehicle listed in MT2024, yet adhere to "work related travel" as defined in MT2024, simply driving to and from work (and other incidental travel defined in MT2024) is that acceptable to gain the FBT exemption?
Anyway the ATO called me today. As anticipated the answers to part A and B are in my favor. The ATO told me there is no distinction relating to what the car is used for during business hours whatesoever. The notion that the vehicle must be primarily used or intended for business functions, such as hauling tools/goods etc, is false, according to the ATO. I was very explicit in my quesitoning. This is all within the context of MT2024 and my arrangements as per the questions above. I will be getting this more explicit answer in writing, and further the ATO have asked if I would like to arrange a private ruling, which I probably will and publish here.

Summary: regular office workers can lease a vehicle listed in MT2024a (or another ute/dual-cab as per the passenger vs load carrying ratio calculation). You do not have to justify what the vehicle is used for in a business sense. As long as you comply with the private use conditions, the car is FBT free.

If anyone wants to dispute this, please PM me and we will open a dialogue with the ATO together.

You will encounter people who give you 101 reasons why you cannot really have these cars FBT free, and of course our tax system is complex and there is any number of other scenarios where other rules or caveats apply. My advise is to get an answer from the ATO in writing.

[clixanup]

I will be getting this more explicit answer in writing, and further the ATO have asked if I would like to arrange a private ruling, which I probably will and publish here.

I wouldn't be so hasty. They have already said in writing that you are allowed to do exactly what you want to do, so you don't really need a private ruling.

Private rulings are binding and they will do everything in their power to ensure that you stick to it (i.e. audit you for a few years running).

Seen it happen.

[jsttry]

I wouldn't be so hasty. They have already said in writing that you are allowed to do exactly what you want to do, so you don't really need a private ruling.

Private rulings are binding and they will do everything in their power to ensure that you stick to it (i.e. audit you for a few years running).

Seen it happen.
No they didn't say it in writing....they called him and said it verbally....well that's how I read it.

[LSX-438]

No they didn't say it in writing....they called him and said it verbally....well that's how I read it.
i do have it in writing from the first time i asked (about 2 years ago) link to scanned ATO letters are in this thread somewhere. Today they called me with answers to extra questions, and i will be getting a letter to back it up (not a ruling).

[digger]

A word of caution. The vehicle will be classified as a non FBT Vehicle, however there is then a residual FBT liability to contend with. If you use the vehicle for "anything other than occasional private use" you will be liable for :( FBT on the full use of the vehicle. That is, if you only use it for travel to and from work with the occasional private use it is FBT free. If you go on your annual hoilday or take it to the football on Sat arvo then the residual FBT kicks in. Guess what, there is no difference in the residual FBT than there would be in vehicle FBT. Sad but true.

[clixanup]

A word of caution. The vehicle will be classified as a non FBT Vehicle, however there is then a residual FBT liability to contend with. If you use the vehicle for "anything other than occasional private use" you will be liable for :( FBT on the full use of the vehicle. That is, if you only use it for travel to and from work with the occasional private use it is FBT free. If you go on your annual hoilday or take it to the football on Sat arvo then the residual FBT kicks in.

1 logbook for 3 contiguous months of the year once every 5 years will keep you covered. It may seem like a painful exercise, but it is only for 3 months once every 5 years and the ATO will have no comeback against it (unless they've been following you around, which is extreme but has been known to happen).

[LSX-438]

I have received the ATO response relating to this question


Is there any distinction or significance relating to how the vehicle is used during business hours? For example; if a regular office worker, that does not require a Utility to fulfill duties, was to undertake a novated lease with a vehicle listed in MT 2024, yet adhere to "work related travel" as defined in MT 2024, simply driving to and from work (and other incidental travel) as defined in MT 2024 is that acceptable to gain the FBT exemption?
The answer:


The criteria does not stipulate how the vehicle must be used during business hours, nor does it state that the vehicle must be utilised to fulfil duties of employment.
The letter also confirms there is no constraint on profession and basically reiterates everything here I have pushed in relation to MT2024. This thread is an excellent example for the range of interpretation and how it conflicts with advice direct from the ATO itself.

If anyone would like a copy of the letter please PM your email address to myself.

[daabido]

Sorry to drag up this old chestnut after everyone thought it had been put to rest. I have a couple of questions that I hope someone can answer;

1. Is it the pay people or the contracted salaray sacrifice company that is making it difficult to access the FBT concession.

2. If the pay people decided they will include the FBT on your group certificate could you then make a case when you put your tax return in for the extra tax to be returned?

Thanks!

[SSBarney]

Sorry to drag up this old chestnut after everyone thought it had been put to rest. I have a couple of questions that I hope someone can answer;

1. Is it the pay people or the contracted salaray sacrifice company that is making it difficult to access the FBT concession.

2. If the pay people decided they will include the FBT on your group certificate could you then make a case when you put your tax return in for the extra tax to be returned?

Thanks!

1. this answer is actually amongst this thread. It is the employer that can not accept it, especially in larger organisations that have become quite systemised. The reason for the employer being hesitant is because FBt is a liability on the employer NOT the employee.

2. As just mentioned, the FBT is not your liability, so u will get nothing back from the ATO. When u salary sacraficed, u effectively agreed with ur employer to receive less wages in cash if they provided a benefit. The costs of that benefit they get a tax deduction for, just the same as ur wages. Therefore any adjustment come back to u showing the employer that their FBt calcs were wrong because they didnt treat ur car as exempt, so they therefore paid too much FBT.
Wont happen that way, only way is for it to accepted up front with ur employer.


NOW Die Thread, Die Die :bash: :bash: :bash: :bash: :bash:

[daabido]

Thanks.

:bash: :bash: :bash: :bash: :bash:

That's what I'll have to do to accounting...

[Dufus]

For those that are interested, there is an updated MT 2024A2 - Addendum listing all current eligible and ineligible vehicles as at 1 June 2005 here:

MT 2024A2 - Addendum (http://law.ato.gov.au/atolaw/view.htm?docid=MTR/MT2024A2/NAT/ATO/00001)

:)

[VYBerlinaV8]

Hi All,

This debate has raged for a while, but I have found the info here quite helpful. I have a question to those who may know:

If your ute/commercial vehicle is leased by your employer, and available for general work use during work hours by other employees, but you drive it home each day and have it to occasionally use on the weekend, is the vehicle FBT exempt?

Sorry if this opens a can of worms, but my employer might do this for me if there's no FBT!

[SSBarney]

Hi All,

This debate has raged for a while, but I have found the info here quite helpful. I have a question to those who may know:

If your ute/commercial vehicle is leased by your employer, and available for general work use during work hours by other employees, but you drive it home each day and have it to occasionally use on the weekend, is the vehicle FBT exempt?

Sorry if this opens a can of worms, but my employer might do this for me if there's no FBT!

Yes it will be exempt. There is no difference in the senario u have mentioned, to the well discussed "infrequent private use situation", except that other employees might use "your" car during work hours for work.
Barney

[VYBerlinaV8]

Thanks for the quick response! ;)

[VYBerlinaV8]

Hi - sorry to open this can of worms again but I have a new question. MT2024 deal with dual cab utes. What about vans? Vehicles such as a Mitsubishi Express or Ford Transit?

Where do I find the ruling on those? I looked on the ATO website, but it seems that unless you're an accountant type, it's hard to find.

Cheers!

[SSBarney]

Hi - sorry to open this can of worms again but I have a new question. MT2024 deal with dual cab utes. What about vans? Vehicles such as a Mitsubishi Express or Ford Transit?

Where do I find the ruling on those? I looked on the ATO website, but it seems that unless you're an accountant type, it's hard to find.

Cheers!

Comes back to is it "primarily designed for carrying passengers". So people mover will not be exempt, but your 2 seater courier style van will be. The same calc will apply, carrying capacity of passengers vs carrying capacity of goods.

[VYBerlinaV8]

Thanks SSBarney, I really appreciate your time to answer this. The van I am considering is a standard 2 seater, 1 tonne cargo van.

Is there a ruling or directive, other than the actual legislation (Section 8??)?

Thanks again.

[XsPwr2W8]

Sorry to keep this thread alive another day:bash: but I am looking at this same issue and found a good summary of exempt utes. check out

http://www.austaxaccountants.com.au/docs/Motor%20vehicles%20exempt%20from%20FBT.pdf

[Jonesy]

Most companies that I know of (including the one I work for now) do Salary Sacrifice Vehicles under a Novated Lease arangement. Which basically means that the vehicle belongs to you and not the company.

The numerous quotes from rulings as above are for vehicles that are owned by the company and packaged under a sal sac arrangement.

If your trying to get an FBT exemption for these vehicles under a novated lease and your not even in a trade that requires that type of vehicle then good luck.

[MalooR8]

Far out how old is this thread!!! I'd forgotten alll about it.

Talk about timing, I've recently had the same arguement with another accountant and his FBT specialist over a salary packaged bike. Guess who just got another personal ruling using much the same arguments from the ATO with them commenting, no-ones ever asked that question before and we've had to have a meeting over it. I must be in the wrong game I think.

hmmm a Ducati 1098 maybe lol


Most companies that I know of (including the one I work for now) do Salary Sacrifice Vehicles under a Novated Lease arangement. Which basically means that the vehicle belongs to you and not the company.

The numerous quotes from rulings as above are for vehicles that are owned by the company and packaged under a sal sac arrangement.

If your trying to get an FBT exemption for these vehicles under a novated lease and your not even in a trade that requires that type of vehicle then good luck.

Look, accounting is like law and its full of interpretations and accountants will always err on the conservative with clients. Large corporations are inflexible with arrangements etc etc. Whether the vehicle is novated or not is immaterial. Your biggest problem may not be the tax office it may be getting your company to be flexible with the handling of your personal case.

FWIW did you realise that quite a lot of the exotics around are always garaged at their owners business address (or said to be parked). Why? because the vehicle is of no residual benefit to them if its garaged at the office/factory and only used for work purposes (quick trip interstate to see clients maybe?).

I made comment to the ATO with regard to the bike thing that why is it a FBT specialist gets it wrong but some idiot like me can ask the question of them and get an ok. They just said you've got more to gain than the FBT specialist so you look harder for a answer. Fair call!!

Hope all of this has helped people out though, best of luck lads :)

[Tornado 900]

Thank god for this conversasion !!!, I didnt get to read all of the 13 odd pages but I know that the VE SS I'm ordering WILL be FBT exempt, I'm will use it solely for work, I'm a enviro scientist so I cart a lot of shit around, and we use my wifes car for family duties.
Here my question:). My company account said that i can salary sacrifice a personal loan instead of a lease, mainly because if i lease it for 5 yrs I will end up with a 20% residual, but if I salary sacrifice a loan , for the SAME weekly payment I'll own the ute outright after 5 yr's. I need one final clarification the loan payment will be FBT exempt?, I would imagine so seeming as it purchasing a car thats FBT exempt and its used solely for work, I'm also SSan extra 5-6K for the yearly running cost too.??

I take it I cant claim back the GST can I, like what the lease companies do ?

Oh, can anyone PM me so I can have any revelant ATO paperwork emailed to me, Seems the ATO link in here dont really take me to the article.

[Lukkyphil]

Updated list of exempt vehicles on the ATO website as at 1/7/07

://law.ato.gov.au/atolaw/view.htm?locid='MTR/MT2024/NAT/ATO'&PiT=99991231235958


just type http and then paste in the above link.

Oh and note that Maloo and Maloo R8 are on the list.....

[nang3]

OK not quite FBT related but could any accountants out there answer this ;

I work installing architectural mouldings as a subcontractor for 1 main company, couple of small jobs on the side.

I have an ABN and I'm registered for GST (sole trader).

About to buy a work ute thats 100% for work use under a chattel mortgage, say for $20,000 over 5 years - I will be paying for everything for the ute. We have 2 other cars for private usage.

I always carry tools, ladders, stock etc and sometimes will drive to 5 different worksites per day, averaging around 400-800kms a week.

Is it more beneficial to get a 1 tonne capable ute vs a normal ute all other things being equal?
Or are all tax benefits the same but the normal ute requires logbooks (PITA)?

If i spend say $4000 on a gas conversion, is that deductible/depreciable or anything?
what about other things like an alloy tray, canopy, towbar, new tyres that happen to be on 20" rims etc??

What component if any of the chattel mortgage is deductible?
Can I deduct 1/11 of the purchase price off my GST liability for the financial year assuming the car included GST when i bought it?

[the_g]

G'day all. I am trying to convince my employer that leasing fbt exempt vehicle is legal. I will eventually get my own ATO ruling however in order to convince them I was wondering if anyone has a private ruling that they would be happy to send to me (delete all personal info of course).

Cheers

[6_litre_man]

I never knew about this, this is possibly the greatest news i have ever heard lol.

So my 2008 ssv falls into the exempt category and i definetly meet the criteria, What is the best way to proceed from here?

Do i contact my lease people straight away with the information or go through my tax agent? Will i get reimbursed for all FBT i have payed so far?

Cheers
Matthew