If you let an employee use a work vehicle for private use, you need to keep records that:
- identify the vehicle
- prove its market value or cost price
- show how you calculated the number of days it was liable for fringe benefit tax (FBT)
- support your claim for any exempt days
- outline any restriction on the private use (usually a letter or notice)
- show how any employees' contributions were calculated
- support any claim for employees' contributions.
Work-related vehicles partially available for private use
If a work vehicle is partially available for private use you need to give employees a letter or written notice that lists the specific days the motor vehicle is available (for example, “Saturdays, Sundays and statutory holidays”). You must keep a copy of this in your files.
Vehicles exempt from FBT
For any motor vehicle that is exempt from FBT you need to keep:
- a description of the vehicle to prove it qualifies for the exemption
- a copy of the letter or written notice you gave to employees that set the limits on its private use.
You should check every 3 months to make sure the vehicle has not been used for unauthorised private use. Keep a record of these checks to help prove that the vehicle meets the requirements of the exemption.
Keeping records of every exempt day can be time consuming. Instead, you can keep a full record of exemptions over a 3-month test period and then use these results for the next 3 years. After 3 years you’ll need to run a new test period.
The test period you use depends on your FBT filing frequency.
- Quarterly filers must run the test period over a full quarter. You can use the results of the test period to calculate FBT from the first day in the quarter the test was in.
- Income year filers can run the test period over any 3 consecutive months in the income year. You can use the results of the test period to calculate FBT from the first day in the income year the test was in.
- Annual filers must run the test period over a full quarter. You can use the results to calculate FBT from 1 April of the year the test was in.
You need to continue to keep track of the number of exempt days. If the actual number of exempt days is 20% higher than the test period result you can keep using the test period results through to the last day of the quarter, year or income year. You will then need to run a new test period.