Vehicles. StateFleet Conference. Presented by Glenn Smith FBT Risk & Intelligence Australian Taxation Office. 9 September 2010

Transcription

1 Fringe Benefits Tax and Motor Vehicles StateFleet Conference Presented by Glenn Smith FBT Risk & Intelligence Australian Taxation Office 9 September 2010

2 Overview of session Different rules for cars and other vehicles What is a car? When is a car benefit provided? Private travel Available for private use Valuing car benefits Exempt car benefits FBT and Motor Vehicles StateFleet Seminar 9 September

3 Overview of session (continued) Employee contributions How FBT applies if your vehicle is not a car Tolls and car parking Logbooks Common errors made by employers Where to find more FBT information FBT and Motor Vehicles StateFleet Seminar 9 September

4 Different FBT rules for cars and other vehicles Car benefits have different record keeping requirements and valuation rules The law contains a definition of what is a car FBT and Motor Vehicles StateFleet Seminar 9 September

5 What is a car? The following types of vehicles (including four-wheel drive vehicles) are classified 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 designed d to carry less than one tonne, and all other passenger-carrying vehicles designed to carry fewer than nine occupants. FBT and Motor Vehicles StateFleet Seminar 9 September

6 When is a car benefit provided? when the car is actually used for private purposes by the employee, or when the car is available for the private use of the employee. FBT and Motor Vehicles StateFleet Seminar 9 September

7 Private travel Most travel between home and work is private Travel relating to stand-by duty can be private Travel where business component is incidental to private travel FBT and Motor Vehicles StateFleet Seminar 9 September

8 Available for private use The car is not on employer premises, and the employee is allowed to use it for private purposes i.e there is not a consistently enforced prohibition on private use, or The car is garaged at or near the employee s home. If extensive repairs are being undertaken, the car is not taken to be available for private use FBT and Motor Vehicles StateFleet Seminar 9 September

9 Emergency vehicles Garaging a car at or near an employee s residence will not, by itself, be a fringe benefit if the car is a visibly marked ambulance, firefighting or police service vehicle fitted with flashing warning light and appropriate bell or siren. Fringe benefit would still be provided if the travel between home and work was private or if any other private travel was undertaken FBT and Motor Vehicles StateFleet Seminar 9 September

10 Valuing car benefits There are two methods of valuation: Statutory formula: base value of car statutory tor percentage, varies according to distance travelled in the FBT year multiply l base value by statutory t t percentage. FBT and Motor Vehicles StateFleet Seminar 9 September

11 Statutory Formula Method Example Value of car is $40,000 Car travelled 19,000 km in the FBT year Calculation: $40,000 x 20% = $8,000 This amount would be reduced if: The car was not available for private use on every day, or The employee paid a contribution for using the car. FBT and Motor Vehicles StateFleet Seminar 9 September

12 Valuing car benefits (cont d) Operating cost (logbook) method: maintain a log book recording details of business travel record details of actual and notional expenses - ascertain business and private use percentages - then multiply total operating costs by the private use percentage. FBT and Motor Vehicles StateFleet Seminar 9 September

13 Operating Cost Method Example Actual car operating costs $4,000 Deemed operating costs (Depreciation and Interest) $8,000 Total operating costs $12,000 If private use is 25% of total use the taxable value is $3,000 (25% of $12,000) which could be reduced by employee contributions. (Fringe benefits tax car calculator is a very useful online FBT and Motor Vehicles StateFleet Seminar 9 September tool)

14 Exempt car benefits No FBT is payable if both of the following conditions are satisfied: 1. The car must be: - a taxi, or - a panel van, utility or other commercial vehicle i.e. one not designed principally to carry passengers. FBT and Motor Vehicles StateFleet Seminar 9 September

15 Exempt car benefits (cont d) 2. The private use of the vehicle must be limited to: travel between home and work travel incidental id to travel in the course of performing employment-related duties, and non work-related use that is minor, infrequent and irregular (for example, occasional use of the vehicle to remove domestic rubbish). FBT and Motor Vehicles StateFleet Seminar 9 September

16 Employee contributions An employee contribution is when an employee pays an amount to the employer for private use of a car or pays operating expenses (e.g. petrol for the car) to a third party. it reduces the taxable value of the benefit it may require documentation (declarations) from employees. Employee contributions may be assessable income for the employer and may also be a GST taxable supply. FBT and Motor Vehicles StateFleet Seminar 9 September

17 How FBT applies if your vehicle is not acar Benefits may be exempt if private use is limited it to: travel to and from work use that is incidental to travel in the course of performing employment-related duties, and non work-related use that is minor, infrequent and irregular such as the occasional use of the vehicle to remove domestic rubbish. FBT and Motor Vehicles StateFleet Seminar 9 September

18 How FBT applies if your vehicle is not acar No statutory requirement to keep a logbook Can be valued on cents per kilometre basis if the vehicle is used extensively for business purposes Other valuation methods. FBT and Motor Vehicles StateFleet Seminar 9 September

19 Tolls and car parking Tolls and car parking are not considered to be car expenses they are separate benefits Tolls are subject to FBT if they relate to a private journey these tolls can be apportioned using car private use % or other methods Car parking charges are a separate FBT category and have a choice of valuation methods. FBT and Motor Vehicles StateFleet Seminar 9 September

20 Car parking conditions for FBT to be payable Car is parked at premises that are owned or leased by, or otherwise under the control of, the provider (usually the employer) Within a one-kilometre radius of the premises on which the car is parked, there is a commercial parking station that charges a fee for all-day parking, which is more than the car parking threshold (currently $7.46 per day) The car is parked for a total of more than four hours between 7.00am and 7.00pm on the day. FBT and Motor Vehicles StateFleet Seminar 9 September

21 Car parking conditions for FBT to be payable The car is owned by, leased to, or otherwise under the control of, an employee, or is provided by the employer The car is parked at or near the employee s primary place of employment on that day The car is used by the employee to travel between home and work (or work and home) at least once on that day The commercial parking station referred to above must also, at the beginning of the FBT year, charge a representative fee for all-day parking that is more than the car parking threshold. FBT and Motor Vehicles StateFleet Seminar 9 September

22 Record keeping and logbooks What types of records do you need to keep? employee declarations logbooks operating cost details (if relevant to benefit value) odometer records How long do you have to keep the records for? five years from the date they are prepared, p obtained or the transactions completed. FBT and Motor Vehicles StateFleet Seminar 9 September

23 Logbook records Continuous period of at least 12 weeks Contain at least the following information the date(s) on which the journey began and ended the odometer readings at the start and end of each business journey, the log book period and each year the kilometres travelled, and the purpose of the journey. How long do you have to keep the records for? five years from the date they are prepared, obtained or the transactions completed. FBT and Motor Vehicles StateFleet Seminar 9 September

24 Common errors made by employers Incorrectly thinking cars are eligible for the exemption: Some models of utes and twin cabs are not eligible Level and type of private use can mean the vehicle is not eligible for the exemption Failure to keep correct logbook / odometer records Failing to recognise when private use occurs. FBT and Motor Vehicles StateFleet Seminar 9 September

25 Where to find more FBT information Fi Fringe benefits tax A guide for employers: - visit and search for qc418 - (chapters 7, 16 and 20 particularly relevant) Fringe benefits tax car calculator (online tool) - visit and search for qc37354 Details of whether particular vehicle models are eligible for the exemptions: - visit and search for qc Fringe benefits tax and road tolls - fact sheet - visit au and search for qc FBT and Motor Vehicles StateFleet Seminar 9 September

26 Where to find more FBT information Better practices for the administration of FBT - visit and search for qc69358 Better practices for managing specific fringe benefit types - visit and search for qc FBT and Motor Vehicles StateFleet Seminar 9 September

27 Our commitment to you We are committed to providing you with accurate, consistent and clear information to help you understand your rights and entitlements and meet your obligations. If you follow our information in this presentation and it turns out to be incorrect, or it is misleading and you make a mistake as a result, we must still apply ppy the law correctly. If that means you owe us money, we must ask you to pay it but we will not charge you a penalty. Also, if you acted reasonably and in good faith we will not charge you interest. If you make an honest mistake when you try to follow our information in this presentation and you owe us money as a result, we will not charge you a penalty. However, we will ask you to pay the money, and we may also charge you interest. If correcting the mistake means we owe you money, we will pay it to you. We will also pay you any interest you are entitled to. If you feel that this presentation does not fully cover your circumstances, or you are unsure how it applies to you, you can seek further assistance from us. This information in this presentation was current at August FBT and Motor Vehicles - Webinar 27