The Australian Tax Office (ATO) is intensifying its efforts to crack down on businesses that are not correctly paying Fringe Benefits Tax for vehicles provided to their employees. Offering dual cab utes to workers can lead to substantial annual savings for businesses, as they are exempt from fringe benefits tax. However, this tax exemption is contingent on employees using these work vehicles for personal purposes infrequently.
The surge in popularity of dual cab utes, such as the Ranger or Toyota Hilux, on Melbourne roads has raised concerns at the ATO regarding how these vehicles are being utilised by businesses. While the appeal of these vehicles lies in their versatility, serving as work vehicles during the week and family or recreational vehicles on weekends, the ATO wants to ensure that businesses are complying with tax regulations.
Tax authorities suspect that employees may be using these work utes for personal purposes more frequently than allowed.
Chartered Accountants Australia Spokesperson Susan Franks cautioned that once these vehicles are not used infrequently for private purposes, they become subject to Fringe Benefits Tax, placing a financial burden on employers. To ensure compliance, tax officers will scrutinise state registration data and other available information to verify that businesses are adhering to the rules.
Franks emphasized that the onus will be on employers to demonstrate that they have policies in place to enforce restrictions on vehicle usage, ensuring that these vehicles are exclusively used for work-related purposes. This crackdown by the ATO aims to ensure that tax regulations related to Fringe Benefits Tax are properly observed and that businesses are not taking advantage of the tax exemptions for dual cab utes.
Should you wish to have a further discussion in regard to your Fringe Benefit Tax obligations, please contact our office to setup a time with one of our expert team members.