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Dual-cab utes under scrutiny by ATO
- 3 May 2024
- by Tim Olynyk | Partner | Tax Advisory
- 2-minute read
It is common for employers to provide a dual-cab ute to their employee which may be used by the employee in varying degrees for work related purposes. Read more about the fringe benefits tax rules here.
Thank you for reading this post, don't forget to subscribe!What has the ATO said?
The ATO has recently made it clear that they intend to review arrangements involving dual-cab utes to ensure compliance with fringe benefits tax (FBT) rules.
What is the law?
Firstly, a reminder that where an employer provides an employee with use of a dual-cab ute, the employer will be considered to have provided a fringe benefit to their employee.
Within the FBT legislation, there is a limited FBT exemption for the provision of dual-cab utes. However, in order to be exempt, the dual-cab ute must:
- Be designed to carry a load of more than 1 tonne (calculated as the difference between its curb weight and its load capacity) or, if designed to carry a load of less than 1 tonne, have a load capacity of its tray that exceeds the load capacity of the weight of total passengers that can be seated in the vehicle;
AND
- The amount of private use of the dual-cab ute must be minor and infrequent.
What is minor and infrequent?
The ATO have previously issued guidance that they will treat non-work related travel as minor and infrequent if the total amount of private use does not exceed 1,000 kilometres for the year and any particular private use return journey undertaken during the year did not exceed 200 kilometres.
If the amount of private use of the dual-cab ute does not qualify as minor and infrequent, the employer will have an FBT liability in relation to the provision of the dual-cab ute to their employee.
What if the dual-cab ute is not eligible to be FBT exempt?
If the dual-cab ute is designed to carry a load of less than 1 tonne, FBT can be calculated using the statutory formula method or log-book method. In comparison, if the dual-cab ute is designed to carry a load of more than 1 tonne (which many do), FBT is calculated differently, in a way that is similar to the log-book method.
What if you own the dual-cab ute yourself?
A taxpayer who owns a dual-cab ute and uses it for work can claim tax deductions:
- If the dual-cab ute is designed to carry a load of less than 1 tonne, deductions can be claimed on a cents per kilometre basis (capped at 5000 kilometres) or based on the log-book business use percentage as it relates to the costs incurred for the vehicle
- If the dual-cab ute is designed to carry a load of more than 1 tonne, deductions can only be claimed based on the business use percentage as it relates to the costs incurred for the vehicle
One other point of note. The following types of dual-cab utes will not be subject to the depreciation cap limit of $68,108:
- Dual-cab utes designed to carry a load of more than 1 tonne (calculated as the difference between its curb weight and its load capacity)
OR
- Dual-cab utes designed to carry a load of less than 1 tonne where the load capacity of its tray exceeds the load capacity of the weight of total passengers that can be seated in the vehicle.
Need advice?
We have experienced Tax Advisors and Accountants who can advise you on fringe benefits tax as it pertains to dual-cab utes.
Contact your BG Private advisor, or contact our Tax Advisory Partner, Tim Olynyk on +61 3 9810 0700 or t.olynyk@bgprivate.com.au and we can help.
