ALERT - EMPLOYER'S RESONSIBILITY FOR EXEMPT VEHICLES
20 June 2004
It is important that you as an employer are aware of your obligation to ensure that 'exempt' vehicles are used for the prescribed limited purposes only. We are aware of many State and Local Government employers who are falling short of meeting these obligations. A recently published private ruling provides some examples of what the Commissioner considers sufficient evidence that an employer is enforcing the limited use conditions. Please note that it would probably be insufficient to simply issue a policy document to employees without ensuring that policy is followed by those employees.
As the employer you are liable for any fringe benefits tax payable on any benefits you provide. Therefore you will need to ensure that the conditions required for the exemption to apply are met for the whole of the period the car was provided during the year of tax. In other words for there to be an exempt car benefit you must be able to demonstrate that at all times there was no private use of this vehicle other than "work related travel" and any other private use was minor, infrequent or irregular.
By way of example this could be done by comparing at regular periods the opening and closing odometer readings of the car with the total distance expected to be travelled between home and work during that particular period. Alternatively you may require more detailed records of the cars usage during the FBT year such as a log book together with opening and closing odometer readings.