The question of Fringe Benefits Tax (FBT) on utes (utility vehicles) is one of the most common questions we get here at StreetFleet. Most people know the rule that utes with a 1 Tonne carrying capacity are FBT exempt, but that is not the only rule you need to know.
The second part of the rule is that, if it has a carrying capacity of less than 1 tonne (dual cab utes usually fall into this category) it can still be exempt if it is not designed for the ‘principal purpose of carrying passengers’.
The ATO has provided a formula to work out if your vehicle is or is not designed for the ‘principal purpose of carrying passengers’ in its ruling MT2024. To paraphrase, what it says is the following:
If the number of seats in the ute (including driver) x 68 is greater than the majority of remaining load capacity, then the vehicle is designed for the principal purpose of carrying passengers.
If the number of seats in the ute (including driver) x 68 is less than the majority of remaining load capacity, then the vehicle is FBT exempt.
68 refers to 68kg, which is the figure adopted for the purposes of the application of the Australian Design Rules.
Here is an example:
Gross vehicle weight =2,000 kgs
Basic kerb weight = 1,400 kgs
Seating capacity = 5
Passenger weight = 340kgs (5 x 68)
Remaining load capacity = 600 kgs (2000 – 1400)
Answer: This 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.
To be eligible for this exemption the employee’s private use of such a vehicle is limited to:
- travel between home and work
- travel that is incidental to travel in the course of duties of employment
- non-work related use that is minor, infrequent and irregular (for example, occasional use of the vehicle to remove domestic rubbish).