Car Fringe Benefit

If you make a car you own or lease available for the private use of your employee, you may provide a car fringe benefit.

For fringe benefits tax (FBT) purposes, a car is any of the following:

• a sedan or station wagon
• any other goods-carrying vehicle with a carrying capacity of less than one tonne, for example a panel van or utility (including four-wheel drive vehicles)
• any other passenger-carrying vehicle designed to carry fewer than nine passengers.

If the vehicle provided doesn't meet the definition of a car, and your employee has private use of the vehicle, the right to use the vehicle may be a residual fringe benefit.

Private use

A car is taken to be available for the private use of an employee on any day that they or their associates:

• use it for private purposes
• are allowed to use it for private purposes.

If a car is garaged at or near your employee's home, even if only for security reasons, it is taken 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 employment and residence are the same, the car is taken to be available for the private use of the employee.

Generally, travel to and from work is private use of a vehicle.

Exempt car benefits

There are some circumstances where use of the car is exempt from FBT. For example, an employee’s private use of a taxi, panel van or utility designed to carry less than one tonne, is exempt from FBT if its private use 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 (for example, occasional use of the vehicle to remove domestic rubbish).

Other benefits relating to the use of a car

Other benefits you provide relating to the use of a car, whilst not constituting a car fringe benefit, may instead constitute an expense payment or residual fringe benefit. For example:

• if you pay for, or reimburse, an employee’s expenditure on road tolls, you may be providing an expense payment fringe benefit
• if you allow an employee to use your electronic toll tag, you may be providing a residual fringe benefit
• if you allow private use of a motor vehicle that is not a car, you may be providing a residual fringe benefit.