Private ruling: Exempt Motor Vehicle
Published: December 2013

Ruling: These reasons for decision accompany the Notice of private ruling for an Employer proposing to provide a dual cap motor vehicle to an employee. | While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision. | Summary | As the vehicle's total carrying capacity is X kg and Y kg relate to passenger load capacity, the remaining Z kg is designate for load capacity. | As such the motor vehicle is not designed for the purpose of carrying passengers. | Detailed reasoning | Under the provisions of the Fringe Benefits Tax Assessment Act 1986, a liability for Fringe Benefits Tax (FBT) arises where an employer provides or makes available for private use a motor vehicle (car) which is held by the employer to an employee. | However, under the provisions of sub-section 8(2) of the FBTAA 1986, where the provision of a motor vehicle will give rise to a car fringe benefit the fringe benefit will be an exempt benefit if the car is: | · a taxi, panel van, or utility designed to carry a load if less than 1 tonne, or | · any other road vehicle designed to carry a load of less than 1 tonne ( other than a vehicle designed for the principal purpose of carrying passengers);and | · there was no private use of the car during the year of tax and at the time the | benefit was provided other than: | · work related travel of the employee; and | · other private use by the employee or associate of the employee, being other use that was minor, infrequent and irregular. | Work related travel is defined in sub-section 136(1) of the FBTAA 1986 to be travel between the employee's residence and place of employment or other places where duties of employment are performed and any travel that is incidental to travel in the course of performing duties of employment. | The Commissioner of Taxation has issued Taxation ruling MT 2024 where a view was formed relating to the provision of vehicles known as dual cabs and their qualification for work related use exemption. | Dual cabs are variants of conventional goods vehicles under which additional seating positions are provided behind the driver and front passenger seats. They share a common chassis to which the single or dual passenger cab and alternate tray sections may be fitted. | Under paragraph 8 of Taxation Ruling MT 2024, such dual cab vehicles will be capable of qualifying for the work related exemption only if either of the following tests are satisfied. | (a) they are designed to carry a load of one tone or more, or more than 8 passengers | (b) while having a designed load capacity of less than one tone, they are not designed for the principal purpose of carrying passengers. | For the purpose of determining whether the motor vehicle in question is designed to be a passenger carrying vehicle or a load carrying vehicle the Commissioner under paragraphs 11 to 17 of MT 2024 accepts the application the Australian Design Rules and the designed seating capacity of the motor vehicle. | This involves the multiplication of the designed seating capacity of the car by 68 kgs which is the figure adopted by the purpose of the application f the Australian Design Rules. | Paragraph 11 of Miscellaneous Taxation Ruling MT 2024 Fringe benefits tax: Dual cab vehicle's eligibility for exemption where private use is limited to certain work-related travel discussed as to what the Commissioner considers the designed load capacity of a motor vehicle. It states: | Consistent with that approach, the designed load capacity of a motor vehicle is to be taken as the gross vehicle weight as specified on the compliance plate by the manufacturer (broadly, the maximum all-up loaded weight), reduced by the basic kerb weight of the vehicle. For this purpose, basic kerb weight is synonymous with unladen weight, as specified in the Australian Design Rules, being the weight of the vehicle with a full tank of fuel, oil and coolant together with spare wheel, tools (including jack) and installed options. It does not include the weight of goods or occupants. | Paragraphs 12 to 17 of MT 2024 state: | 12. In the case of cab/chassis vehicles, the designed load capacity is to be ascertained after the body has been fitted to the vehicle, i.e. to satisfy the one tonne test, the margin between the gross vehicle weight and the basic kerb weight must not be less than one tonne plus the weight of the body which is ultimately attached to the vehicle. | 13. Where, on the application of this test, it can be concluded that a particular dual cab model has a designed load capacity of one tonne or more, there will be no FBT liability if employee use of the vehicle during a particular FBT year consists solely of eligible work-related travel or private travel which is minor, infrequent and irregular. | 14. As previously mentioned, a dual cab that has a designed load carrying capacity of less than one tonne may still qualify for the work-related use exemption, under sub-section 8(2), if the vehicle is not designed for the principal purpose of carrying passengers. It is considered that the appropriate basis for determining this issue is whether or not the majority of the designed load capacity is attributable to passenger carrying capacity. It is understood that this approach is consistent with that adopted under the Australian Design Rules in determining what a passenger vehicle is. | 15. For this purpose the designed passenger carrying capacity is to be determined by multiplying the designed seating capacity (including the driver's) by 68 kg, which is the figure adopted for the purposes of the application of the Australian Design Rules. | 16. If the total passenger weight so determined exceeds the remaining "load" capacity, the vehicle is to be treated as being designed for the principal purpose of carrying passengers and as such ineligible for work-related use exemption. | 17. By way of illustration, if a vehicle has a gross vehicle weight of 2,000 kgs, a basic kerb weight of 1,400 kgs, and has a designed seating capacity of five, the vehicle would be considered to be a vehicle designed principally for the carriage of passengers. This is because the total load capacity is 600 kgs of which the majority, 340 kgs, would be absorbed by its designed passenger carrying capacity. | Normally the commissioner issues a list (which although not comprehensive) of various such dual cab motor vehicles which are eligible for the exemption. | As the motor vehicle subject to this ruling is a 2013 model and the list for the 2013 FBT year of tax is in the process of being updated, it is necessary to apply the described method as per paragraphs 15, 16, and 17 of MT 2024. | Description and information provided for the car subject to this ruling: | Dual Cab Diesel Automatic | Year of manufacture: 2013 | Seating capacity: 5 persons | Total vehicle carrying capacity: 855 Kgs | Applying the test per paragraph 15 of MT 2024: | Multiply the seating capacity (5 persons) by (68 Kgs) result to 340 Kgs which is the load capacity for passengers. | As the vehicle's total carrying capacity is X Kgs and Y Kgs relate to passenger load capacity, the remaining Z Kgs is designated for load capacity. | As such the motor vehicle is not designed for the purpose of carrying passengers. | Since the motor vehicle is designed to carry a load of less than 1 tone and is found not to have been designed for the purpose of carrying passengers, the motor vehicle qualifies for the work related use exemption available under sub section 8(2) of the FBTAA 1986.