The Australian Taxation Office has released Practical Compliance Guidelines (PCG) 2016/10 Fleet Cars: simplified approach for calculating car fringe benefits.
The guidelines allow businesses to apply an ‘average’ business use percentage across all ‘tool of trade’ vehicles as long as 75% or more of those vehicles have a valid log book, and:
• there are 20 or more tool of trade vehicles in the employer’s fleet
• the car benefits are used by employees for predominantly business purposes
• the employer has a mandatory log book policy for tool of trade cars
• employer policy restricts the makes and models available to employees to a predetermined list
• the cars were not subjected to luxury car tax at the time of purchase; and
• The cars were not provided as part of the employees remuneration package (i.e. not salary sacrificed)
The new (concessional) method can be applied from the current FBT year.
Businesses with large fleets should review their FBT processes to determine whether the new approach is feasible. Significant savings could be available in relation to tool of trade vehicles that have previously had to be valued under the statutory formula method (because valid log-books were difficult to obtain).
Businesses should identify all qualifying vehicles and, where beneficial, plan ahead to ensure the minimum 75% log book requirement is met.
Further information is available from the ATO or your Employment Tax advisor.
For further information in relation to this, or any other FBT matters, KPMG’s Employment Taxes team is available to help. Members interested in learning more can contact Simon Ellis on (02) 9346 6360 or [email protected]