Tax Deductibility of Utility Vehicles

Do you own or lease a Utility vehicle which you claim for business purposes?  If so, ensure you can substantiate that it is principally used for business purposes.  The ATO are currently targeting businesses that own utility vehicles but are not accounting for any private use or paying any fringe benefits tax.

Just because a vehicle is on the ATO’s FBT Exempt Vehicles list, does not alone entitle businesses to claim a tax deduction for the running costs without any fringe benefits tax implications.

An employee’s use of a panel van, utility or other commercial vehicle (ie. one not designed principally to carry passengers) is only exempt if the employee’s private use of such a vehicle is limited to:

  1. travel between home and work;
  2. travel that is incidental to travel in the course of duties of employment; and
  3. non-work related use that is minor, infrequent and irregular (for example, occasional use of the vehicle to remove domestic rubbish).  The ATO have stated that this should be no more than 5% of total use.

In addition to the above criteria, dual cab vehicles only qualify for the work-related use exemption if either:

  • they are designed to carry a load of one tonne or more, or more than eight passengers; or
  • if having a designed load capacity of less than one tonne, they are not designed for the principal purpose of carrying passengers.

If you have any doubt as to the private usage of your vehicle outside of the above travel, you should keep a log book and account for any private use.