Private ruling: Fringe Benefits Tax
Date of advice: 7 December 2018
Published: April 2019

Ruling: Q1: For the purposes of determining eligibility for fringe benefits tax exemption under subsection 8(2) or subsection 47(6) of the Fringe Benefits Tax Assessment Act 1986, does the calculation of the designed load carrying capacity of the dual cab vehicles take into account: (a) accessories fitted by the manufacturer that are standard equipment of a particular vehicle; (b) accessories that are fitted to the vehicle by the car dealer prior to delivery or are fitted by the car dealer or another firm after delivery of the vehicle. | A1: (a) Yes. (b) No.

Relevant facts and circumstances: The employer has acquired a number of dual cab vehicles. These vehicles have had accessories installed which were installed into the vehicle by: ● the manufacturer at the factory as these accessories are standard equipment of a vehicle; ● the car dealer prior to delivery of the vehicle; or ● the car dealer or another firm after delivery of the vehicle e.g canopy cover Most of the accessories were installed by the car dealer prior to delivery of the vehicle. The accessories in question include such items as an aluminium tray, bull bar, cargo barrier, canopy specialised, dual battery system, floor mats, electronic brake controller, front seat covers, reverse sensors, roof bars, tonneau cover, towbar and winch. These vehicles are available for work and private use of its employees.

Relevant legislative provisions: Subsection 8(2) of the Fringe Benefits Tax Assessment Act 1986 | Subsection 47(6) of the Fringe Benefits Tax Assessment Act 1986 | Subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986

Reasons for decision: Summary: In broad terms, a liability for fringe benefits tax (‘FBT’) will arise where an employer’s motor vehicle is used by an employee for private purposes or is available for the private use of an employee. However, under subsection 8(2) (exempt car benefits) and subsection 47(6) (exempt residual benefits) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) a liability for FBT will not arise where the private use of certain vehicles by employees during a particular year of tax is limited to certain work-related travel and non-work related use that is minor, infrequent and irregular. In general, vehicles that qualify for the ‘work-related’ exemption under subsection 47(6) are those are those that are not classified as a car (as defined in subsection 136(1) of the FBTAA) that is, vehicles other than those which are designed to carry a load of less than one tonne and fewer than nine passengers. Alternatively, under subsection 8(2), a vehicle may qualify for the exemption if, while classified as a car for the purposes of the FBTAA, it is a taxi, panel van, utility truck or any other road vehicle that, while designed to carry a load of less than one tonne, is not designed for the principal purpose of carrying passengers. One of the considerations when considering eligibility for exemption under either exemption provision is the designed load carrying capacity of a particular vehicle i.e whether the vehicle is designed to carry a load of less than one tonne or not. Miscellaneous Taxation Ruling MT 2024 Fringe benefits tax: dual cab vehicles eligibility for exemption where private use is limited to certain work-related travel (MT 2024) provides guidance for calculating the designed load carrying capacity of a particular vehicle. It notes at paragraph 7 that dual cabs are not utility trucks: At paragraph 11 of MT 2024 the methodology for calculating the load carrying capacity of dual cabs is set out, as follows: 11. …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. This methodology was based on the methodology that was used for determining eligibility for the former income tax investment allowance under section 82AF of the Income Tax Assessment Act 1936 . In Case J63 77 ATC 537, the Board of Review considered the phrase ‘other road vehicles designed to carry loads of less than one tonne‘ for the purposes of determining whether the investment tax allowance provisions in former section 82AF applied to a particular vehicle. It was held that the question of what load a vehicle is designed to carry is to be determined in the light of the Australian Design Rules. On this basis, the designed load of a vehicle is to be calculated as the difference between the ‘Maximum loaded vehicle weight’ and the ‘Unladen vehicle weight’ of a vehicle (as defined in the Australian Design rules). MT 2024 states that the ‘gross vehicle weight’, also referred to as the ‘maximum all-up loaded weight’ is taken to be the weight of the vehicle specified on the compliance plate by the manufacturer. In the current Australian Design rules, namely the Vehicle Standard (Australian Design Rule – Definitions and Vehicle Categories) 2005, the term ‘gross vehicle mass’ is defined as being the maximum laden mass of a motor vehicle as specified by the manufacturer. The definitions of the terms ‘laden mass’ and ‘manufacturer’ used in the definition of ‘gross vehicle mass’ are defined as follows: ‘Laden Mass’ - the mass of a vehicle and its load borne on the surface on which it is standing or running. ‘Manufacturer’ - the name of the person or company who accepts responsibility for compliance with the Australian Design Rules to whom the ‘ Compliance Plate’ approval certificate is issued. Consequently, the term ‘gross vehicle weight’, as used in MT 2024, and the term ‘gross vehicle mass’, as defined in the Australian Design rules, effectively refer to the same thing. MT 2024 also states that the term ‘basic kerb weight’ is taken to be synonymous with the term ‘unladen weight’ as defined 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 but not including the weight of goods or occupants. The current Australian Design rules provide the following definition for 'unladen mass' which has the same meaning as 'unladen vehicle weight'. UNLADEN MASS - the mass of the vehicle in running order unoccupied and unladen with all fluid reservoirs filled to nominal capacity including fuel, and with all standard equipment. Standard equipment refers to the common equipment that a specific model of car is supplied with as specified and provided by the manufacturer. Therefore in light of the Commissioner’s view as expressed in MT 2024, the decision in Case J63 and the definitions found in current Australian Design Rules, it is considered that the accessories that are included in the calculation of the load carrying capacity of a vehicle are those that are fitted at the time the gross vehicle weight is determined by the manufacturer. The difference between the two weights at that time is the load capacity of the vehicle at the time it was designed. Therefore, the calculation of the designed load carrying capacity of a motor vehicle for the purposes of the ‘work-related’ exemption provisions will take into account the accessories fitted by the manufacturer that are standard equipment of the particular vehicle. Accessories that are not standard equipment of the particular vehicle are not included in the calculation of the designed load carrying capacity of a vehicle. Accordingly, accessories that are fitted by the car dealer to the vehicle at the time of delivery such as the canopy cover or are fitted by the car dealer or other another firm after delivery of the motor vehicle are excluded from the calculation of the designed loaded carrying capacity of the motor vehicle for the purposes of the ‘work-related’ exemption provisions.