The ATO is warning employers to take care to avoid unnecessary FBT for car fringe benefits provided to employees.As a result of the COVID lockdown earlier this year, many employees have been working from home at a far greater rate. If these employees have had the use of a car provided by their employer, the employer will need to check how they are calculating their fringe benefits, to avoid unnecessary FBT.
With working from home becoming much more prevalent in 2020, many cars provided by employers are idling away in their employees' garages.When a car is not being driven by the employee at all, or is only being driven for the purposes of maintenance, the ATO will accept that the employer is not holding the car for the purposes of providing a fringe benefit. If the employer elects to use the operating cost method, and keeps sufficient records, they may not have an FBT liability for that car - or their liability may be reduced.
To ensure that the FBT liability is kept to a minimum, it is recommended that employees keep a log book to record the reduced use of the vehicle. This will help the employer to correctly record business vs private use and will serve as evidence of reduced use of the car due to changes in work practices, resulting from the pandemic.
Talk to our tax team for further details on how COVID-19 might impact on your business's FBT liability.
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