Dual-cab utes have become just about the most popular vehicle type on the market today. However, from a Fringe Benefits Tax (FBT) perspective, not all dual-cabs are necessarily created equal.
There’s an exemption from FBT available for “Commercial vehicles not designed principally to carry passengers”. To work out if a dual-cab satisfies the requirement of not being designed principally to carry passengers, there’s a calculation involved in relation to its load carrying limits.
If the dual-cab ute has a load carrying capacity (the vehicle only, excluding any towing capacity) of 1,000kg or more, it will qualify for the exemption from FBT. This is calculated by subtracting the basic kerb weight of the vehicle (the weight of the vehicle, full of all relevant fluids and fuel, and any fitted accessories, but without any passengers or cargo), from the Gross Vehicle Mass (GVM) per the Manufacturer’s Compliance Plate.
For example, a 2019 Hilux Workmate 4x4 Double Cab Automatic:
- GVM 3,000kg minus kerb weight 1,915kg = 1,085kg
If the result of this is less than 1,000kg, a further calculation is required to determine if the vehicle is or is not “primarily used to carry passengers”. This is determined by deducting 68kg per passenger seat from the total load capacity, and then comparing the remaining load capacity with the total passenger capacity (at 68kg per passenger). If the remaining load capacity is more than the passenger weight, then the vehicle complies. If the load weight is less than the passenger weight, it does not comply.
For example, a 5-seat vehicle with a total load carrying capacity of 650kg:
- 5 x 68kg = 340kg (total passenger weight)
- 650kg – 340kg = 310kg (total load weight)
- 310kg is less than 340kg, so the vehicle won’t comply and won’t be eligible for the exemption
If the vehicle itself complies with the requirements, the use of the vehicle must be limited to:
- travel between home and work
- travel incidental to employment/business operation activities
- non-work related use that is minor, infrequent and irregular (for example, occasional use of the vehicle to remove domestic rubbish)
If the use of the vehicle is not in line with these limits, FBT will apply, no matter the kind of vehicle in question. The benefit may not be classified as a “Car” Fringe Benefit, it may be a “Residual” Fringe Benefit, but neither have any of the tax benefits of the exemption.
The only time where travel between home and work is not counted as “private” travel is in relation to this FBT exemption. If this exemption doesn’t apply, all travel between home and work is ‘private’ travel for the purposes of the relevant legislation.
The ATO has offered some guidance recently in relation to what is acceptable “minor, infrequent and irregular use” for vehicles provided not via salary sacrifice arrangements:
- Diverting between work and home of less than 2km is acceptable
- Fully private trips must each be less than a 200km round trip, and must total no more than 1,000km a year
If you have any queries about whether your vehicle is subject to FBT, or the records the ATO require to prove any of the above requirements, please contact your Altitude Adviser.