Minor, infrequent and irregular use for an FBT exempt vehicle.

When an employer provides a vehicle to an employee, the issue of whether FBT applies will arise.

Where a workhorse vehicle (e.g. single cab ute, panel van) has been provided to an employee, employers can rely on safe harbour treatment to treat the vehicle as meeting the requirements to be FBT-exempt.

To be eligible for the safe harbour treatment, all of the following must be met

• Vehicle is provided to employee for use in performance of work duties.

• Has a GST inclusive value less than the luxury car tax threshold.

• Cannot be provided under a salary packaging arrangement.

• The employer has a policy in place limiting private use.

• Employee uses the vehicle to travel between home and work and any diversion adds no more than 2km to the length of the trip.

• Total private use for the vehicle (excluding home to work travel) in the FBT year must not exceed 1,000km and no return journey exceeding 200km.

Even if not all conditions are met, an employer may still be eligible to treat a vehicle as exempt if private use is minor, infrequent and irregular as set out in TR2007/12.

The key take home - documentation is key.