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FBT and business vehicles

Business owners who make a car (leased or owned) available for employees to use for private travel may be subject to fringe benefits tax (FBT).

If a car is garaged at or near your employee’s home, even if only for security reasons, it is considered by the ATO to be available for their private use regardless of whether or not they have permission to use the car privately.

Similarly, where the place of residence and employment are the same, the car is considered as private use. Generally, travel to and from work is also private use of a vehicle.

The use of the car is exempt from FBT in some circumstances, i.e an employee’s private use of a taxi, panel van or utility designed to carry less than one tonne if the travel is limited to:
– travel between home and work
– incidental travel in the course of performing employment-related travel
– non-work-related use that is minor, infrequent and irregular

The best way to show the ATO that a car is used for business purposes is by keeping a log book for a period of at least 12 consecutive weeks showing:
– dates of travel
– odometer readings at the start and end of any trips
– the kilometres travelled
– the reason for the trip

Business owners should also keep odometer readings at the start and end of each year, along with details of the operating costs of the car.

Note, company directors are generally considered as employees by the Tax Office, so if directors use the car for private purposes, then FBT could apply.

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News

SMSFs: beware of illegal early super release

July 13, 2018

The Australian Tax Office (ATO) is reminding self-managed super fund (SMSF) trustees to beware of allowing members to access their super early.

A self-managed super fund (SMSF) trustee must meet a condition of release before any funds can legally be released.

The ATO can issue severe penalties if you or a SMSF member access your super before you are legally entitled to do so.

Some consequences of getting caught up in an illegal super scheme include the disqualification of trustees, imposition of administrative penalties, the fund being made non-complying and prosecution.

The Tax Office encourages those members who have been involved in an illegal super scheme to contact them immediately. The ATO will review your voluntary disclosure and take your circumstances into account when determining any penalties.