ATO to crack down on Fringe Benefits Tax (FBT)
Warning: If you have a car registered in your company name and don’t lodge an FBT then you can expect scrutiny from the ATO.
The ATO has announced it is focusing on FBT for the 2025-26 year. In particular they are looking at private use of work vehicles, including dual cab utes and electric vehicles. The ATO obtains its data from the various state motor vehicle registries. The areas that they will be focusing on are log books, correct logging of private use and improper claiming of exemptions.
Log Books
A log book needs to be to be kept in the prescribed form and needs to be renewed every 5 years or if there is a significant change in the vehicle usage.
Dual Cab Utes
A common mis-understanding is that dual cab utes are automatically exempt from FBT. To be exempt a ute must designed to carry a load of one tonne or more or carry more than 8 passengers (including the driver) or a load of less than one tonne, but not primarily designed to carry passengers AND only used for limited private use. Using a dual cab ute as the family vehicle would certainly not qualify.
Electric Vehicles
Whilst a battery EV is exempt a hybrid EV is generally losing its exemption from 1st April 2025.
We have had instances where the client has registered the vehicle in the company name solely to obtain business type finance, ABN discounts or insurance. The ATO has assessed the client for FBT based on the statutory rate of 20%.
Recommendations
- Ensure accurate and up to date log books are maintained.
- Review employee declarations for private use.
- Consider lodging a Nil FBT Return to demonstrate compliance.
