Private ruling: FBT: Excluded benefits - Pooled or shared cars
Published: April 2012
Ruling period: Fringe benefits tax years ended | 31 March 2013 | 31 March 2014 | 31 March 2015
Date scheme commenced: 1 April 2012

Ruling: Q1: Will the car fringe benefits provided to the employees in scenario 1 be an excluded fringe benefits for the purposes of paragraph 5E(3)(i) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)? | A1: Yes | Q2: Will the car fringe benefits provided to the employees in scenario 2 be an excluded fringe benefits for the purposes of paragraph 5E(3)(i) of the FBTAA? | A2: Yes | Q3: Will the car fringe benefits provided to the employees in scenario 3 be an excluded fringe benefits for the purposes of paragraph 5E(3)(i) of the FBTAA? | A3: Yes | Q4: Will the car fringe benefits provided to the employees in scenario 4 be an excluded fringe benefits for the purposes of paragraph 5E(3)(i) of the FBTAA? | A4: Yes | Q5: Will the car fringe benefits provided to the employees in scenario 5 be an excluded fringe benefits for the purposes of paragraph 5E(3)(i) of the FBTAA? | A5: Yes | Q6: Will the car fringe benefits provided to the employees in scenario 6 be an excluded fringe benefits for the purposes of paragraph 5E(3)(i) of the FBTAA? | A6: 

Relevant facts and circumstances: For the purposes of this ruling, all vehicles provided by the employer are cars as defined by subsection 995-1 of the Income Tax Assessment Act 1997 (ITAA 1997) as directed by subsection 136(1) of the Fringe Benefits Tax Regulations 1992 . The employer operates a fleet of vehicles which are provided to their employees. The employees have varying levels of private usage of the vehicles permitted according to their level under the employer's Motor Vehicle Policy. All vehicles are provided with at least commuting level permission and then varying levels of extended private use. The vehicles are at minimum commuting purposes with home garaging. All vehicles have a regular allocated driver, that is, the vehicle is allocated to a single employee on 7 days a week / 365 days a year basis. However, it is a requirement of the employer's Motor Vehicle Policy that the vehicles be available for pooled use by other employees. Any employee wishing to qualify for the reporting exemption must have the pooled use approved by a senior manager in writing unless the change of driver is as a result of an employee leaving leading to a reallocation, or due to an internal reallocation of vehicles at the instruction of Management. During an FBT year a particular car may be made available for the private use of more than one employee. The employer use either statutory formula method or operating cost method to value the car fringe benefits resulting from the use of the cars. During a particular FBT year a car may come within one of the following 6 scenarios: Scenario 1: A car is allocated to an employee for private use who then is absent for a period on leave. The period of leave may range from 1 night to 6 months long service leave. During this absence the car is allocated to another employee who is permitted to use the vehicle for commuting purposes which includes home garaging. Scenario 2: A car is allocated to an employee who resigns during the FBT year. The car is subsequently allocated to another employee for commuting purposes which includes home garaging. Scenario 3: A car allocated to an employee is directed to be reallocated to a different employee by management during the FBT year. The reallocation may be temporary or it may be permanent. Scenario 4: A car allocated to an employee is utilised overnight on only one occasion during the FBT year by another employee to attend an out of town meeting/conference. The private use of the car is restricted to commuting from the office to home and return. Scenario 5: A car allocated to an employee is utilised overnight on a number of occasions during the FBT year by another employee to attend an out of town meeting/conference. The private use of the car is restricted to commuting from the office to home and return. Scenario 6: Two employees swap their cars between themselves for a short period of time. The swap is officially approved by management. The swap result in some level of private use of the car for commuting purposes which includes home garaging.

Relevant legislative provisions: Fringe Benefits Tax Regulations 1992 3F | Fringe Benefits Tax Regulations 1992 3F(1) | Fringe Benefits Tax Regulations 1992 3F(2) | Fringe Benefits Tax Regulations 1992 3F(3). | Fringe Benefits Tax Assessment Act 1986 Section 5B. | Fringe Benefits Tax Assessment Act 1986 Subsection 5C. | Fringe Benefits Tax Assessment Act 1986 Section 5E. | Fringe Benefits Tax Assessment Act 1986 Subsection 5E(1). | Fringe Benefits Tax Assessment Act 1986 Subsection 5E(2). | Fringe Benefits Tax Assessment Act 1986 Subsection 5E(3). | Fringe Benefits Tax Assessment Act 1986 Paragraph 5E(3)(i). | Fringe Benefits Tax Assessment Act 1986 Subsection 7(1). | Fringe Benefits Tax Assessment Act 1986 Subsection 45. | Fringe Benefits Tax Assessment Act 1986 Subsection 58P. | Fringe Benefits Tax Assessment Act 1986 Section 135P | Fringe Benefits Tax Assessment Act 1986 Section 135Q | Fringe Benefits Tax Assessment Act 1986 Subsection 136(1). | Income Tax Assessment Act 1997 Subsection 995-1(1). | Taxation Administration Act 1953 Section Sch1-12-35.

Reasons for decision: Summary: Subsection 5E(2) of the FBTAA, states that the individual fringe benefits amount is the sum of an employee's share of the taxable value of each fringe benefit, in relation to the year of tax and is provided under an employer/employee relationship. Where a car is provided to the first employee and is pooled while the employee is on leave, as directed by the employer, and later used by another employee (even for one night), the car fringe benefit is excluded from being reported, for both employees. During this period, the car is not available for private use by the first employee as subsection 7(2) of the FBTAA is not satisfied. The exclusion occurs despite the second employee's individual fringe benefit amount being below $2000 or exempt as a minor fringe benefit if the conditions are satisfied under section 58P of the FBTAA. The current threshold amount for minor benefit has to be less than $300. The benefits provided to both employees are car benefits under subsection 7(1) of the FBTAA. The taxable value of for each employee's private use of the car has to be calculated. Both subregulation 3F(1) and (2) of the FBTR are satisfied. The car is used to provide car benefits to more than one employee of the employer. Therefore, as the car has been used to provide car benefits to more than one employee, the car fringe benefits will be an excluded fringe benefit for the purposes of paragraph 5E(3)(i) of the FBTAA. A car is allocated to an employee for private use who resigns during the FBT year. The same car is subsequently allocated to another employee for commuting and involving home garaging. Period may range from a change over during an FBT year. Both subregulation 3F(1) and (2) of the FBTR are satisfied. The car is shared by two employees. The instructions of the employer are followed and the employer is aware of the movements of one of their assets. There are two separate car fringe benefits. The car is used to provide car benefits to more than one employee of the employer. Therefore, the car fringe benefits will be an excluded fringe benefit for the purposes of paragraph 5E(3)(i) of the FBTAA. Where a car is provided to the first employee and is pooled as directed by the employer, and later used by another employee on a temporary or permanent basis (may be 1 night or any length of time). During this period, the car is not available for private use by the first employee as subsection 7(2) of the FBTAA is not satisfied. The benefits provided to both employees are car benefits under subsection 7(1) of the FBTAA. The taxable value of for each employee's private use of the car has to be calculated. Both subregulation 3F(1) and (2) of the FBTR are satisfied. The car is shared by two employees. The instructions of the employer are followed and the employer is aware of the movements of one of their assets. The car is used to provide car benefits to more than one employee of the employer. Therefore, the car fringe benefits will be an excluded fringe benefit for the purposes of paragraph 5E(3)(i) of the FBTAA. Where a car is provided to the first employee and is utilised overnight on only one occasion during the FBT year by the second employee to attend an out of town meeting as directed by the employer. The private use of the car is restricted to commuting from the office to home and return by the second employee. The benefits provided to the second employee are benefits which are exempt benefits under section 58P of the FBTAA being minor benefits, as the notional taxable value of the minor benefit is less than $300, and the benefit is provided infrequently and irregularly. The benefits are fringe benefits within the meaning of fringe benefits in subsection 136(1) of the FBTAA except that the benefits are exempt benefits under section 58P of the FBTAA. These benefits satisfy subregulation 3F(1)(a)(ii) of the FBTR. The car benefits provided to the first employee relates to a car, the provision of which gives rise to the benefit described in subregulation 3F(1)(a) of the FBTR for more than one employee. Subregulation 3F(1)(b) of the FBTR is satisfied and the fringe benefits are excluded fringe benefits under subregulation 3F(2) of the FBTR. The fringe benefits provided to both employees are excluded reportable fringe benefits, and are not required to be disclosed on their respective payment summaries. Where a car is provided to the first employee and is utilised overnight on a number of occasions during the FBT year by the second employee to attend an out of town meeting as directed by the employer. The private use of the car is restricted to commuting from the office to home and return by the second employee. The benefits provided to the second employee are benefits which are exempt benefits under section 58P of the FBTAA being minor benefits, as the notional taxable value of the minor benefit is less than $300, and the benefit is provided infrequently and irregularly. The benefits are exempt benefits, although they are fringe benefits within the meaning of fringe benefits in subsection 136(1) of the FBTAA. These benefits satisfy subregulation 3F(1)(a)(ii) of the FBTR. The car benefits provided to the first employee relates to a car, the provision of which gives rise to the benefit described in subregulation 3F(1)(a) of the FBTR for more than one employee. Subregulation 3F(1)(b) of the FBTR is satisfied and the fringe benefits are excluded fringe benefits under subregulation 3F(2) of the FBTR. The fringe benefits provided to both employees are excluded reportable fringe benefits, and are not required to be disclosed on their respective payment summaries. Two different cars are provided to two employees. The employees swapped their allocated cars and the swap is officially approved by the employer. The employer has provided all employees directions in the manner the car is to be used and pooled. It was made clear that a car has to be pooled before being used by another employee and log-book records have to be kept. Each car used to provide car benefits to more than one employee of the employer. Therefore, as each car has been used to provide car benefits to more than one employee, the car fringe benefits will be an excluded fringe benefit for the purposes of paragraph 5E(3)(i) of the FBTAA.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet. | Reasons for decision: Under subsection 7(1) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA), a car benefit will arise at any time on a day in respect of the employment of an employee where a car is held by the employer and is applied to a private use by the employee or is taken to be available for the private use of the employee. | Subsection 136(1) of the FBTAA and subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997) provides: | car means a motor vehicle (except a motor cycle or similar vehicle) designed to carry a load of less than 1 tonne and fewer than 9 passengers. | You provide your employees with a vehicle designed to carry less than 1 tonne and carry fewer than 9 passengers. Therefore, you provide your employees with a car. | Reportable fringe benefits amount for a year of income in respect of the employment of the employee by an employer has the meaning given by section 135P or 135Q of the FBTAA (as appropriate). | Work related travel, in relation to an employee, is defined in subsection 136(1) of the FBTAA | In general terms an employer is required to report the grossed-up taxable value of the fringe benefits provided to an employee on the employees payment summary when the employees individual fringe benefits amount is more than $2,000. | Subsection 5E(2) of the FBTAA defines the individual fringe benefits amount as: | the sum of the employees' share of the taxable value of each fringe benefit that relates to the year of tax and is provided in respect of the employment other than an excluded fringe benefit. | An excluded fringe benefit is defined in subsection 5E(3) of the FBTAA is a fringe benefit: | (i) that is a benefit prescribed by the regulations for the purposes of this paragraph; or | Subregulation 3F(1) of the Fringe Benefits Tax Regulations 1992 (FBTR) states, with reference to section 5E of the FBTAA: | For paragraph 5E(3)(i) of the Act, a benefit is an excluded fringe benefit if, during the year of tax: | (a) the benefit is a car benefit, as described in subsection 7(1) of the Act, that is: | (i) a fringe benefit within the meaning of subsection 136(1) of the Act; or | (A) is an exempt benefit; and | (B) would have been a fringe benefit except that the benefit is an exempt benefit; and | (b) the car benefit relates to a car the provision of which gives rise to the benefit described in paragraph (a) for more than 1 employee. | The employer of 3 employees makes 1 car available to the employees, for private use, at different times during the year of tax. | In considering the example in subregulation 3F(1) of the FBTR, subregulation 3F(2) goes on to state: | The fringe benefit is an excluded fringe benefit in relation to each of those employees. | To therefore qualify as an excluded fringe benefit under regulation 3F of the FBTR, the following conditions must be met: | a. The benefit must be a car benefit. | b. During the year more than 1 employee must receive a car benefit from the provision of the car.