A weekend away in the work ute could land tradies in hot water with the ATO as the financial watchdog cracks down on businesses taking advantage of the system.
Under current laws, construction businesses can claim a sizable exemption for fringe benefit tax (FBT) payments on dual cab utes if they are bought and provided to employees as part of their job.
This exemption can mean thousands of dollars in savings over a typical vehicle lease, making a $80,000 Toyota Hilux cheaper to lease than a $55,000 SUV.
But this only applies if use is “limited”, such as driving to and from work, and the Australian Tax Office (ATO) suspects many tradies are flaunting the rules.
The ATO has warned tradies using these utes for personal use may be forced to pay their employees thousands of dollars in reparations.
“If an employee’s use of a dual-cab ute doesn’t meet the conditions of limited private use, it’s a car fringe benefit, or residual benefit and FBT applies,” said a spokesperson.
“If you or your employees drive the work ute to weekend footy matches, tow the boat to go fishing on Sundays, or going on camping trips, it’s likely you’ll go above and beyond the definition of ‘limited private use.”
As a general rule, FBT applies to work utes and vans used for weekend trips or exceeding 750 km a year in private trips.
Tradies caught using their work utes recreationally will be subject to hefty fines, likely resulting in thousands of dollars in reparations.
With dual cab utes like the Toyota Hilux and Ford Ranger now the best-selling cars in Australia, the spokesperson said utes were “one of our focus areas for FBT reviews and audits”.
The ATO said tax officers will use state registration data and third-party information to make sure businesses comply with the laws.
Chartered Accountants Australia Spokesperson Susan Franks told Nine News earlier this month that employers should assess the use of work utes if they wanted to avoid the fine.
“As soon as people are not using them infrequently for private purposes, they become subject to FBT and the employer has a bill that they need to contend with,” she said.
“The emphasis is going to be on employers, they’re going to have to show they’ve got policies where they actually enforce restrictions on the use of the vehicles, ensuring vehicles are only used for work-related purposes.”
