Employers who provide work vehicles to their employees should review how those vehicles are used and whether any fringe benefits tax (FBT) exemptions apply. Personal use of a work vehicle is one of the most common fringe benefits—and also one of the most frequently overlooked.

FBT generally applies when a work vehicle is made available for private use, even if it is not actually driven for private purposes.

Private use includes:

      School drop-offs and pick-ups (even if on the way to or from work).

      Transporting friends or family for non-work-related reasons.

      Parking the vehicle at the employee’s home (even for security reasons).

Exemptions may apply depending on the type of vehicle and the extent of private use.

Tax agents can help clients avoid costly mistakes that may result in unexpected FBT liabilities. The ATO has identified several common issues, including:

      Incorrectly treating private use as business use.

      Assuming dual cab utes are automatically exempt — exemptions only apply if the vehicle qualifies and private use is limited.

      Incorrectly classifying vehicles.

      Inadequate record keeping, resulting in unsupported FBT claims or calculations.

      Failing to report or pay FBT on time.

Employers should regularly review their vehicle use policies and maintain detailed records to ensure compliance and avoid penalties

Please contact us directly if you need any help with this.

(Source: Information extract from The NTAA's October 2025 Tax Advisers' Voice)