The ATO has released draft guidelines, outlining that utes will no longer be Fringe Benefits Tax (FBT) exempt and employers will need to have their drivers keep logbooks to ensure private usage stays within new, capped limits.
For a long time, businesses using utilities
were exempt from FBT, so long as they were used predominantly for business use and personal use was ‘minor, infrequent and irregular’.
The ATO has released draft guidelines that outline that these vehicles will no longer be exempt and employers will need to have their drivers keep logbooks
to ensure private usage stays within new capped limits.
This means that employers could face new FBT and compliance expenses.
The guidelines outline that the old FBT rules were unrealistic as no one was really policing the private usage of these vehicles:
“Feedback and experience has shown inconsistency as to methods used by employers to ensure compliance with the car-related exemptions leading to additional
compliance costs especially when the private travel is relatively low”, the ATO said.
“To reduce these compliance costs and provide certainty, this draft guideline explains when the Commissioner will not apply compliance resources to determine
if private use of the vehicle was limited for the purposes of the car-related exemptions.”
Under the new guidelines, employees must not deviate from their usual route to and from work by more than two kilometres.
The draft uses the example of travelling to sports practice after work in excess of two kilometres as unacceptable, as sports practice would comprise the
primary destination and not a diversion from one’s usual route from work to home.
These new guidelines are expected to be retrospective, which means all travel from 1 April 2017 (start of the FBT year) will be factored in.
This means that businesses need to be mindful that employees limit their personal use of work vehicles to the two-kilometre allowance effective immediately,
or the company could be liable for FBT.
The guidelines also allow for an extra 750km a year of non-work travel, capped at 200km in any single return trip, but this needs to be supported by logbook.
Overall, these changes will provide more freedom for private use than was previously in place, as they allow for minor deviations from the route home to
pick the kids up and do drop offs.
However it will apply much more stringent reporting and compliance requirements to one of the highest selling segments in Australia.
StreetFleet has solutions to help businesses deal with these new issues, and this includes an electronic logbook to help produce easy and ATO compliant FBT reports annually, as well as other features.
Some businesses are now offering car allowances to staff and are dealing with the FBT through a tax-effective method of leasing, such as a novated lease.
(Our thanks to James Ehmann at StreetFleet for permission to reproduce this article.)
Electronic FBT logbook
EROAD, a global technology provider of fleet management, electronic tax reporting and safety compliance solutions for the transportation industry,
has launched its new ATO approved electronic FBT logbook.
“This new software release will make life a lot easier for fleet managers trying to track personal mileage for their staff vehicle use and reconcile
FBT claims – especially given the accuracy and reliability of our in-vehicle telematics devices,” said Steven Newman, EROAD CEO.
“Our focus is on simplifying complex transportation management issues and this latest release demonstrates our ability to leverage our underlying technology
and capability to create new and effective solutions for our customers.”
The EROAD electronic FBT logbook product is said to be a fully integrated secure solution that utilises an in-vehicle electronic distance recorder
(Ehubo2) connected to a remote application server (Ehubo Gateway) via a cellular network. The customer can view fleet records on a password protected
self-service portal (Depot) via the internet.
EROAD’s electronic FBT logbook minimises the time spent by staff collecting and maintaining the required records to lodge FBT claims. Also, by using
an automated solution users can improve the accuracy of their tracking and subsequently minimise their FBT payments.
The software runs on EROAD’s single device in-cab (Ehubo2), so it removes the complexities associated with managing mobile apps for logbook recording,
as well as enabling other benefits such as driver log-in on-screen and real time driver behaviour feedback.
In a finding released on August 22, 2018, the Australian Tax Office (ATO) issued a ruling that the EROAD electronic FBT logbook system satisfies the
requirements to perform as a logbook and an odometer, under Section 10A of the Fringe Benefits Tax Assessment Act 1986 (FBTAA), Section 10B of
the FBTAA and Subsection 136(1) of the FBTAA.
EROAD senior product manager Rebecca Kemp stated:
“The ability to collect the trip purpose when a driver starts a journey and automatically collect key trip data via the Ehubo2 GPS tracking unit means
that we can provide extremely accurate reporting for FBT claims, as well as high level metrics to help employers analyse vehicle usage.
“This is a valuable addition to our complete telematics solution for Australian transport operators.”