Providing a work car to your employees can be a great incentive.
If you provide a car to an employee for their private use, you may need to pay fringe benefits tax (FBT).
You make a car available for private use by an employee on any day that the car is either:
- actually used for private purposes by the employee, or
- available for the private use of the employee.
A car is considered available for your employee’s private use when it is:
- used to travel to and from work
- not at your premises and they are allowed to use it for private purposes
- garaged at their home – regardless of whether they have permission to use it for private purposes.
For FBT purposes, a ‘car’ includes:
- a sedan or station wagon
- any other goods-carrying vehicle with a carrying capacity of less than one tonne, such as a panel van or utility (including four-wheel drive vehicles)
- any other passenger-carrying vehicle designed to carry fewer than nine passengers.
If you’re currently providing your employees with a vehicle or looking to do so, please get in touch with your STS Accountant to discuss whether you have FBT requirements today.