A number of benefits are exempt from fringe benefits tax (FBT). Exempt benefits are not only exempt from FBT, they are also (with one exception) exempt from income tax in the hands of the employee to whom you (the employer) provide them.
There are circumstances in which private use of a car may be exempt from FBT.
An employee’s private use of a taxi, panel van or a utility designed to carry less than one tonne, or any other road vehicle designed to carry a load of less than one tonne is exempt if their private use of such a vehicle is limited to:
• travel between home and work
• travel that is incidental to travel in the course of performing employment-related duties
• non-work-related use that is minor, infrequent and irregular – for example,
occasional use of the vehicle private use.
For example, a small construction company employee takes the company van (carrying capacity of less than one tonne) home each night because there is no security at the company premises. The only non-work-related use during the FBT year was a trip to pick up some materials and take it to the employee’s home – this use of the van would be exempt from FBT. If the use of the vehicle exceeds the limits set out above, it is a car fringe benefit. All the private use of the vehicle, including the travel between home and work, is taken into account in determining the business percentage under the operating cost method. If no logbook records are maintained, the statutory formula method must be used to value the car fringe benefit.
Living-away-from-home accommodation – expense payments
Rather than paying a cash living-away-from-home allowance to an employee whose duties of employment require them to live away from their normal residence, you may prefer to reimburse the employee for the accommodation expenses or pay these expenses on behalf of the employee – that is, as with an expense payment fringe benefit.
In these circumstances, the payment is an exempt benefit where the living -away-from-home accommodation requirements are met.
Recreational facilities, child care facilities – residual benefits
Recreational or child minding facilities are exempt benefits if the facilities are provided on your business premises for the benefit of employees. Where such facilities are provided on business premises of a related company in a wholly owned company group, they are also exempt.