Private ruling: E mployee use of certain vehicles
Date of advice: 7 December 2022
Published: 6 February 2023
Ruling period: Year ended 31 March 20XX | Year ended 31 March 20XX | Year ended 31 March 20XX
Date scheme commenced: 1 April 20XX

Ruling: Q1: Does the provision of a specific type of vehicle to employees constitute a car benefit under section 7 of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) if the vehicle is a 'car' and is only used for travel in accordance with the Employer's policy for its use? | A1: Yes. | Q2: Is the provision of a specific type of vehicle to employees exempt under either subsection 8(2) or subsection 47(6) of the FBTAA if the vehicle is only used for travel in accordance with the Employer's policy for its use? | A2: No. | Q3: In the event that the provision of a specific type of vehicle does constitute a benefit under either section 7 or section 45 of the FBTAA, will travel performed by employees in these vehicles in accordance with the Employer's policy for its use be considered business use under the operating cost method on the basis that the vehicles are required to transport bulky equipment? | A3: No. | Q4: In the event that the provision of a specific type of vehicle constitutes a benefit under either section 7 or section 45 of the FBTAA, will any of the following journeys be considered a 'business journey'? a) Employee Type A travels between home and their regular place of work b) Employee Type B travels between home and their regular place of work c) Employee Type A travels between home in response to a call-out d) Employee Type B travels between home and an incident in response to a call-out e) An employee garages a vehicle at home where they have been working in the field and return home rather than returning to their regular place of employment f) An employee garages a vehicle at home as they are traveling directly to a location that is not their regular place of work the following morning. g) Employee Type A travels between their home to a non-home and non-work location on rare occasions h) Employee Type B travels between their home to a non-home and non-work location on rare occasions | A4: 4 a) Yes 4 b) Yes 4 c) Yes 4 d) Yes 4 e) Yes 4 f) Yes 4 g) No 4 h) No

Relevant facts and circumstances: The Employer operates a fleet of vehicles that may be made available to certain employees for the purposes of responding to call outs. At present, this fleet of vehicles is made up of four types of vehicles. This application only deals with one of these types of vehicles. This can include vehicles that meet the definition of a car under subsection 995-1 of the ITAA 1997 and vehicles that do not satisfy that definition. Equipment is stored in these vehicles (detailed list provided) and the employer provides a 24 hour service in which staff may be required to travel and use that equipment at locations other than the employee's regular place of employment. As the employer operates a 24 hour service they have two classes of employees who are on call outside of business hours. These are Employee Type A and Employee Type B. These vehicles are allocated to the employees on call and the employees take a vehicle home and if called out travel to the location of the call out which is not a regular place of employment. The employees will return the vehicle to their regular place of employment during normal business hours where it will be used by the employer as a pooled vehicle. This would include travel in which an employee would attend a location where the equipment stored in the vehicle would need to be used. In certain circumstances an employee not on call may garage the vehicle overnight at their place of residence. This will only occur with the direct approval of their manager where: A copy of the relevant policies in respect of the use of the Employer's vehicles was provided with the application. Assumption For the purposes of Question 2 where the vehicle is a 'car' it is either: Summary The only private travel is any travel that might be undertaken by the employees would be when they leave home to deal with private matters whilst on call. All the other travel will be business. Detailed Reasoning In looking at the FBTAA, home to work travel and the questions asked in the application there are five features we need to address, being; Subsection 7(3) custody or control of the car and available for private use Subsection 7(3) of the FBTAA it states: Where, at a particular time, the following conditions are satisfied in relation to an employee of an employer: (a) a car is held by a person, being: (i) the employer; (ii) an associate of the employer; or (iii) a person (other than the employer or an associate of the employer) with whom, or in respect of whom, the employer or an associate of the employer has an arrangement relating to the use or availability of the car; (b) the car is not at business premises of: (i) the employer; (ii) an associate of the employer; or (iii) a person (other than the employer or an associate of the employer) with whom, or in respect of whom, the employer or an associate of the employer has an arrangement relating to the use or availability of the car; (c) any of the following conditions is satisfied: (i) the employee is entitled to apply the car to a private use; (ii) the employee is not performing the duties of his or her employment and has custody or control of the car; (iii) an associate of the employee is entitled to use, or has custody or control of, the car; the car shall be taken, for the purposes of this Act, to be available at that time for the private use of the employee or associate, as the case may be. In looking at this subsection the cars are held by the Employer and when garaged at the employee's home they are not at business premises of the Employer so we can conclude that paragraphs 7(3)(a) and 7(3)(b) are satisfied. This means if either of the prerequisites outlined in paragraph 7(3)(c) are satisfied the car will be taken to be available for the private use of the employee even if there was no private use. As only the employee is allowed to drive the car what we need to examine is whether the employee: Will the employee have custody or control of the car and is not performing the duties of their employment? The words custody or control are not defined in the FBTAA and take the ordinary meaning and in looking at whether an employee has custody or control Example 1 of Taxation Determination TD 94/16 Fringe benefits tax: where an employee is provided with a car by the employer and the car is kept in safe storage (e.g. in a commercial garage) while the employee is travelling, under what circumstances is that car taken to be available for private use under section 7 of the Fringe Benefits Tax Assessment Act 1986? , concludes that where the keys are taken away from the employee they cease to have custody or control of the vehicle. In this case the employees have the keys as they have to be able to use the vehicle at any time when on-call, so they have custody or control of the vehicle at all times when at home. However, when at home there may be times when on call that they are performing their duties of employment at home but there will also be times where the employee will be doing what any other person would do when at home which are activities that are private in nature Therefore, there will be times throughout a particular day where the employee would have custody or control of the car and is not performing the duties of their employment. Is there an entitlement to use the car for private use? Private use is defined in subsection 136(1) of the FBTAA as in relation to a motor vehicle, in relation to an employee or an associate of an employee, means any use of the motor vehicle by the employee or associate, as the case may be, that is not exclusively in the course of producing assessable income of the employee. Producing assessable income is also defined in subsection 136(1) and includes: (a) gaining assessable income; or (b) carrying on a business for the purpose of gaining or producing assessable income. In looking at an entitlement to use the car for private use we need to look at whether the employee's use is restricted to travel that is undertaken exclusively in producing the employee's assessable income. In looking at the arrangement in place for Employee Type A and Employee Type B they may use the Employer's cars rather than their own car if they need to attend to a personal matter in case they are called out. If the employee was using their own car this journey would be private and the fact that the employee is using the Employer's car does not change the reason why the employee was travelling. If they didn't need to perform the private task the car would still be at the employee's home. Therefore, where the journey is not undertaken in the course of producing assessable income that journey would be private use. By way of illustration ATO Interpretative Decision ATO ID 2012/97 Fringe Benefits Tax: Exempt car benefits: private use examines a situation where an itinerant worker drops their child off at school on their way to work. In the ATO ID it concludes that in looking at that journey as it involved the transporting their child to school the employee's journey from home to one of their work locations was not business travel. It would be a private use of the car because the journey was not made exclusively in the course of the employee producing their assessable income because part of the total journey involved a private task of transporting a child to school. Therefore, in looking at whether a journey is business or private we need to look the reasons for undertaking the trip. If any part of the trip is to perform a personal task, then the trip is not exclusively undertaken in order to produce assessable income and that journey is private use. In this case once the employee has taken the car home at the end of their shift, they may have a personal matter to attend and take the Employer's car. The purpose of the journey is to take care of that personal matter. If the employee completed that personal task and returned home without being called out to an emergency, then the entire round trip would be exclusively private. Therefore, the Employer's cars are available for private use as the employees are able to undertake a journey 'that is not exclusively in the course of producing assessable income of the employee'. Private use and whether it is minor infrequent and irregular Subsection 8(2) of the FBTAA provides an exemption for the use of certain types of cars while subsection 47(6) provides an exemption for the use of certain types of motor vehicles that are not cars. The wording of the two subsections is similar and subsection 8(2) of the FBTAA states: A car benefit provided in a year of tax in respect of the employment of a current employee is an exempt benefit in relation to the year of tax if: (a) the car is: (i) a taxi, panel van or utility truck, designed to carry a load of less than 1 tonne; or (ii) 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 (b) there was no private use of the car during the year of tax and at a time when the benefit was provided other than: (i) work-related travel of the employee; and (ii) other private use by the employee or an associate of the employee, being other use that was minor, infrequent and irregular. Subsection 47(6) of the FBTAA states: Where: (a) a residual benefit consisting of the provision or use of a motor vehicle is provided in a year of tax in respect of the employment of a current employee; (aa) the motor vehicle is not: (i) a taxi let on hire to the provider; or (ii) a car, not being: (A) a panel van or utility truck; or (B) 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 (b) there was no private use of the motor vehicle during the year of tax and at a time when the benefit was provided other than: (i) work-related travel of the employee; and (ii) other private use of the motor vehicle by the employee or an associate of the employee, being other use that was minor, infrequent and irregular; the benefit is an exempt benefit in relation to the year of tax. In addition, work related travel is defined in subsection 136(1) of the FBTAA as: in relation to an employee, means: (a) travel by the employee between: (i) the place of residence of the employee; and (ii) the place of employment of the employee or any other place from which or at which the employee performs duties of his or her employment; or (b) travel by the employee that is incidental to travel in the course of performing the duties of his or her employment. For both these exemptions to apply the employee's private use of a vehicle has to be minor, infrequent and irregular. In looking at what is minor, infrequent and irregular ATO Interpretative Decision ATO ID 2012/98 Fringe Benefits Tax Exempt car benefits: excepted private use provides the following: The FBTAA does not specify what is meant by the terms 'minor', 'infrequent' and 'irregular' in relation to private use and, therefore, each of those terms will take their ordinary meaning in the context in which they are used. The Macquarie Dictionary 2009 , rev. 5th edn, The Macquarie Library Pty Ltd, NSW provides the following definitions for each of the terms: minor adjective 1. lesser, as in size, extent, or importance... infrequent adjective 1. happening or occurring at long intervals or not often... 2. not constant, habitual, or regular... irregular adjective not characterised by any fixed principle, method, or rate: irregular intervals Whether the private use is minor, infrequent and irregular would require an examination of the actual private use of the vehicle. In this case we are being asked to look at the use of vehicles because of the role the employee performs rather than looking at their use of a vehicle. Therefore, in this instance we are only looking at whether we can conclude that the private use of all employees in the same 'position' would be minor, infrequent and irregular. When on call the employee is permitted to attend to private matters in the Employer's vehicle. There are no limits placed on the number of occasions an employee can use the Employer's vehicles to attend to private matters when on call. However, every time they use an Employer's vehicle to attend to a private matter that journey will consist of private use as there is no business being conducted when the employee undertakes the journey. Therefore, it not possible to conclude that Employee Type A and Employee Type B's private use of their Employer's vehicles would be minor, infrequent and irregular. However, an examination of the private use by each employee throughout a full FBT year might demonstrate a specific employee's use of a vehicle to attend to private matters over the FBT year was minor, infrequent and irregular. For the purposes of Question 3 whether all journeys could consider to be business because bulky equipment is carried in the vehicles at all times Travel incorporating the transport of equipment is discussed in paragraphs 37 and 38 of Miscellaneous Taxation Ruling MT 2027 Fringe benefits tax : private use of cars : home to work travel which state: In certain limited ranges of circumstances, the use of a car may be attributed to the necessary carriage of equipment rather than travel to and from work and, as such, accepted as business travel. Guidelines for the application of this principle are discussed in paragraph 21(b) of Ruling IT 112 in the context of the decision in FCT v Vogt, 75 ATC 4073. Broadly, however, the approach should be followed where the employee performs duties at a number of places requiring the transport and use of equipment of substantial bulk such as to justify the need for a motor vehicle to transport it and where there are sound reasons for keeping the equipment at home. This rule would not apply where, as a matter of convenience, the employee performs some work at home and transports papers, materials, etc., (whether bulky or not) between home and work for that purpose (see for example Case Q1 83 ATC 1; Case 65 26 CTBR (NS) 469, where the use of a car by a school principal in such circumstances was treated as private use). Paragraph 37 of MT 2027 references paragraph 21(b) of Taxation Ruling IT 112 Deductibility of travelling expenses between residence and place of employment or business which states: cases comparable with Vogt: Expenditure on travelling may be accepted as having the essential character of expenditure incurred in gaining or producing the assessable income of a taxpayer in the relevant sense where:- (i) the relevant aspects of the operations carried on by the taxpayer for the production of his income are closely comparable with those in Vogt, namely, income is earned by performing his duties at several places by using his own equipment which he brings to the place of performance; the equipment is of substantial value and of such bulk that it can only be conveniently transported by the use of a motor vehicle; and, there are justifiable reasons for the taxpayer to keep the equipment at home; and (ii) the essential character of the expenditure itself is such that the expenditure is incurred as part of the operations by which the taxpayer earns his income; there is no other practicable way of getting his equipment to the places where he is to perform; and the expenditure may be attributed to the carriage of the equipment rather than to his travel to the place of performance. In looking at these rulings and the decision in Federal Commissioner of Taxation v Vogt [1975] 1 NSWLR 194; 5 ATR 274; 75 ATC 4073 ( Vogt's case ), a journey between home and work is a business journey where it can be concluded that the journey can be attributed to the transportation of bulky equipment. However, a deduction is not allowable if the equipment is transported as a matter of convenience. We should also note that there is no definition in tax law of 'bulky' for the purpose of considering the transportation of equipment between home and work but in Crestani v. FC of T 98 ATC 2219; (1998) 40 ATR 1037 (Crestani's case) , a toolbox which measured 57 cm x 28 cm x 25 cm and weighing 27 kg was considered 'bulky', in the sense of 'cumbersome', and the transport cost was 'attributable' to the transportation of such bulky equipment rather than private travel between home and work. It should also be noted that in Crestani's case the employer did not provide a secure storage area for the toolbox and the use of public transport was not a viable option. In other words, in both Crestani's case and Vogt's case there was a justifiable reason for storing the equipment at the employee's home and transporting equipment from where it is stored to where it was physically used to produce the employee's assessable income. In this case the equipment is stored in the Employer's vehicle, so it is being transported every time it is driven. For the purposes of the decision in both Crestani's case and Vogt's case the travel can only be business where it is attributable to the transport equipment. If an employee uses the vehicle to go to the bank to withdraw money, then the journey is undertaken in order to withdraw money from the bank. The equipment just happens to be in the vehicle when that journey is undertaken. Therefore, it cannot be accepted that the purpose of every journey undertaken in these specific vehicles would be attributable to the transport equipment stored in the vehicle. For the purposes of Question 4 whether any journeys could consider to be business because bulky equipment is carried in the vehicles at all times In looking at the operations of the Employer, their employees attended to worked at locations that were not regular places of employment of these employees. As part of the process to service their clients the Employer has put in place a policy in which designated employees respond to 'after hours' call outs. These employees take a specifically allocated vehicle home which is loaded with the equipment they may need to deal when called out. Should the employee be called out they would travel directly to the call out location completing the task using the relevant equipment and then return home. Paragraph 7 of Taxation Ruling TR 95/34 Income tax: employees carrying out itinerant work - deductions, allowances and reimbursements for transport expenses lists the factors that are examined to determine if an individual is itinerant, and it states: There have been a number of cases considered by the Courts, Boards of Review and Administrative Appeals Tribunal where deductions for transport expenses were allowed on the basis of the taxpayers' 'shifting places of work'. 'Shifting places of work' is another term for itinerancy. In these cases, the obligation to incur the transport expenses arose from the nature of the taxpayers' work, such that they were considered to be travelling in the performance of their duties from the moment of leaving home. The following characteristics have emerged from these cases as being indicators of itinerancy: a) travel is a fundamental part of the employee's work (paragraphs 22 to 27 below); b) the existence of a 'web' of workplaces in the employee's regular employment, that is, the employee has no fixed place of work (paragraphs 28 to 33 below); c) the employee continually travels from one work site to another. An employee must regularly work at more than one work site before returning to his or her usual place of residence (paragraphs 34 to 45 below); d) other factors that may indicate itinerancy (to a lesser degree) include: (i) the employee has a degree of uncertainty of location in his or her employment (that is, no long-term plan and no regular pattern exists) (paragraphs 47 to 55 below); (ii) the employee's home constitutes a base of operations (paragraphs 56 to 62 below); (iii) the employee has to carry bulky equipment from home to different work sites (paragraphs 63 to 71 below); (iv) the employer provides an allowance in recognition of the employee's need to travel continually between different work sites (paragraphs 72 to 75 below). If we look at Employee Type A and Employee Type B they are at home waiting to be called out to an emergency and if called out: These factors all indicate that when at home on call that the Employee Type A and Employee Type B could be considered itinerant. However, they also have a regular place of employment which they commute between to work on a normal business day. If there is a call out whilst at their regular place of employment the same equipment, they take home would be needed when travelling to from the employer's business premises. In addition, the vehicle an Employee Type A and Employee Type B uses is placed back in the pool and other employees can use it during the working day providing it is available when Employee Type A and Employee Type B is ready to go home at the end of the day. Given the equipment needs to be transported to a call out location it needs to be at the home of each Employee Type A and Employee Type B when they're on call and available at the Employer's business premises during the working day. Therefore, in looking at the decision in both Crestani's case and Vogt's case the travel undertaken by Employee Type A and Employee Type B between their home and their regular place of employment can be attributed to the transportation of bulky equipment. In addition, in looking at the travel when called out on an emergency the employees clearly needed to transport the equipment needed to deal with the emergency with them. If a conclusion was reached that (when at home on call), Employee Type A and Employee Type B were not itinerant, the travel to and from an emergency could in itself be attributed to the transportation of bulky equipment. Therefore, there are clearly journeys that can be attributed to the transport of bulky equipment. Whether the specific journeys outlines in question 4 are business or private Question 4 was looking at whether specific journeys were business journey. These being a journey where: a) Employee Type A travels between home and their regular place of work b) Employee Type B travels between home and their regular place of work c) Employee Type A travels between home in response to a call-out d) Employee Type B travels between home and an incident in response to a call-out e) An employee garages a vehicle at home where they have been working in the field and return home rather than returning to their regular place of employment f) An employee garages a vehicle at home as they are traveling directly to a location that is not their regular place of work the following morning. g) Employee Type A travels between their home to a non-home and non-work location on rare occasions h) Employee Type B travels between their home to a non-home and non-work location on rare occasions In looking at the eight journeys listed apart from the 4 e) and f) we have already examined these journeys earlier and concluded that that the journey covered by 4: Therefore, we only need to examine questions 4 e) and f) to determine if they are business or private journeys. In looking at business trips on the way to and from work paragraphs 28 to 36 of MT 2027 states: 28. There will be cases where, while the nature of the office or employment is not inherently itinerant, an employee will be required in the ordinary course of duties to visit clients, customers, etc. Examples would occur in the work of employees engaged as accountants, solicitors and doctors. 29. Where return travel of this kind is undertaken from the employee's usual place of employment (e.g., office, surgery, etc.) it will clearly constitute business travel. 30. The position may, however, be less clear where the employee travels from home directly to the client's, etc., premises and then on to the office. Such travel may be undertaken in a variety of circumstances, for example - • the client's premises may be located at a point on or close to the normal route travelled by the employee to the office; • alternatively, the employee may be required to travel in the opposite (or a markedly different) direction to the normal work route; • in some cases, the distance travelled to reach the client's premises will be substantially greater than the direct route to the office; even to the extent that the employee may need to devote the whole day to the visit; • the visit to the client may be the first of a number made before travelling to the office. 31. Such travel is distinguishable from the general position determined in Lunney's case which, to use the words of Dixon C.J. at page 405, deals with travel undertaken "by ordinary people to enable them to go day by day to their regular place of employment or business and back to their homes". 32. The present examination deals with situations where an employee who has a regular place of employment travels to an alternative location which, for the period of the visit, constitutes a place of employment. Further, they involve trips to a destination that, if made from the office or other normal workplace, would constitute business travel. Inevitably the distance of travelling direct from the office would have been greater than that part of the overall journey from home - i.e., the travel between the client's premises and the office - that would clearly constitute business travel. Depending on the respective locations of the premises, the alternative journey of travelling from the office (and return) may, in fact, be greater than the total distance travelled from home. 33. In essence, the question to be determined when, as a practical alternative, an employee travels to a client's premises directly rather than travelling to the office and then to those premises, is whether the travel should similarly be treated as business travel. 34. While the position is not free from doubt and is perhaps clearer in some of the instances cited in paragraph 30 than in others, it has been decided that the total journey from the employee's home to the client's premises and on to the office should be accepted as business travel. This approach is to be adopted where - • the employee has a regular place of employment to which he or she travels habitually; • in the performance of his or her duties as an employee, travel is undertaken to an alternative destination which is not itself a regular place of employment (i.e., this approach would not apply, for example, to a plant operator who ordinarily travels directly to the job site rather than calling first at the depot or to an employee of a consultancy firm who is placed on assignment for a period with a client firm); and • the journey is undertaken to a location at which the employee performs substantial employment duties. As an illustration of this last point, travel to an employee's place of employment would not be accepted as business travel where the employee merely performs incidental tasks en-route such as collecting newspapers or mail. Similarly, for example, the fact that a dentist may call in at a dental laboratory to collect dentures, etc., en-route to the surgery at which he or she is employed would not result in the trip being accepted as constituting business travel. 35. The preceding principles apply equally to cases where an employee makes a business call in the afternoon and travels from there to home, rather than returning to the office. 36. Where an employer provides an employee with a car solely for the purposes of undertaking a business journey from the employee's home the next morning, the trip home on the preceding night will be accepted as business travel, being incidental to the next morning's journey. However, this approach is restricted to circumstances of the kind detailed and would not, for example, apply where a person has regular use of the car for private purposes. Both Questions 4 e) and f) relate to situations where an employee is using a vehicle under a specific policy put in place by the Employer. In order to be granted use under the policy an employee must be required to undertake approved business travel. In other words, the Employer will determine if there is a need for the employee to undertake a business journey. However, approval may be given to garage at home when: In looking at Question 4 e) this is discussed in paragraph 35 of MT 2027 in which we look at the opposite journey to the one listed in the approach in paragraph 34 being: • the employee has a regular place of employment to which he or she travels habitually; • in the performance of his or her duties as an employee, travel is undertaken to an alternative destination which is not itself a regular place of employment (i.e., this approach would not apply, for example, to a plant operator who ordinarily travels directly to the job site rather than calling first at the depot or to an employee of a consultancy firm who is placed on assignment for a period with a client firm); and • the journey is undertaken to a location at which the employee performs substantial employment duties. As there has to be a business reason for a vehicle to be provided it can be accepted that the employee will be performing more than incidental tasks when using the car. In addition, permission to take the car home is only given where the journey is a shorter or more practical route than returning the vehicle to work. Had the vehicle been returned to work that return journey would have been a business journey. Following the approach in paragraph 34 of MT 2027 by taking the vehicle home rather than returning it to work before returning home does not change the nature of the journey and it can be considered to be a business journey. In looking at Question 4 f) this journey is covered by paragraph 36 of MT 2027. Under the Employer's policy the employee only takes the car home if they have to travel directly to a business appointment the next day. If they did not have the appointment the vehicle would not be provided. It can be concluded that the employee took the home car solely for the purposes of undertaking a business journey from home the next morning and that the trip home on the preceding night will be accepted as business travel, being incidental to the next morning's journey.



The employee is using the vehicle to perform duties in the field and the option of proceeding home is a shorter or more practical route than returning to their normal work location; or | The employee takes the car home to allow them to travel directly to a location that is not their usual work location the following morning. | For the purposes of Question 3 whether all journeys would be business journeys because bulky equipment is carried in the vehicles at all times | For the purposes of Question 4 whether any journey would be a business journey because bulky equipment is carried in the vehicles at all times | is entitled to use the car for private use; or | has custody or control of the car and is not performing the duties of their employment. | Work is not performed at home and cannot be dealt with at home. | The employee must travel to the call out location to deal with the call out | The location of the call out is not a regular place of employment | If there are multiple call outs the employee might travel to multiple locations before returning home | There is no certainty of where the call out will be located; and | The employee needs to carry the equipment needed to deal with the call out. | a) and b) would be business as it can be attributed to the transportation of bulky equipment | c) and d) would be business as when on call Employee Type A and Employee Type B could be seen to be itinerant. If not itinerant, then dealing with a call out the journey could be attributed to the transportation of bulky equipment. | g) and h) would be private as the travel involves a journey 'that is not exclusively in the course of producing assessable income of the employee'.