Private ruling: Car Fringe Benefit
Date of advice: 28 March 2017
Published: August 2017
Ruling period: Income year ending 30 June 2017
Date scheme commenced: 01 July 2016

Ruling: Q1: Is there a car fringe benefit where the employer's cars are provided to its employees? | A1: Yes.

Relevant facts and circumstances: The employer holds several cars. The cars are interiorly fitted with certain hardware and software to enable the employees to perform their duties as well as carry other necessary equipment. The cars are provided to the employees, who are required to drive the cars to clients' sites in order to provide technical support, to transport goods, and to install and/or service equipment. After working hours, the cars are driven extensively for purpose of testing relevant hardware and software, as well as collecting and analysing data. Data collected are used for analysis of product performance and data verification. Some of the cars are garaged or kept at the employees' places of residence during night time. One of the cars is based at a different location away from the employer's business premises. After working hours, the car is generally parked at a secured garage of an entity's depot overnight. Occasionally, the car is driven home by the employee in order to attend an early next-day work appointment. Aside from the research and development activities as directed by the employer's management, there is minimal private use of the cars. The cars are monitored for business and/or private uses. An example of the private use of one car is that, an employee drives the car to purchase lunch during lunch break.

Relevant legislative provisions: Fringe Benefits Tax Assessment Act 1986

Reasons for decision: Summary: On the facts, car benefits arise where the cars are garaged at the employees' home overnight and/or driven home occasionally and garaged at the employee's place of residence overnight. When the employer's car is parked away from the employer's business premises and before it is locked behind the security gate of an entity's depot at night time, the employees are deemed to be entitled to use the car for private purposes, as prohibition on private use is not consistently enforced. During the night time when the employer's car is parked behind the security gate of an entity's depot, it is taken to be available for private use and will give rise to car benefit, as prohibition on private use is not consistently enforced. Furthermore, even if prohibition on private use is consistently enforced, which is not the case in current scheme; the car will still be taken to be available for private use, as control over the car remains with the employees.