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ATO’s ‘ new call on company cars might be “rude awakening” for the employers

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With the instigation of ATO’s (Australian Taxation Office) new guidelines, near time might be traumatizing for the employers. It’s expected to be a more amplifying compliance after the modifications made in FBT (Fringe Benefit Tax) rule.

There is a myriad of guidance released for the personal utilization of salary-packaged conveniences incorporating the usage of utes. The taxation office also elucidated about the true meaning of “exceptional and minimal use of official vehicles”.

Formerly the taxation authority clarified that it’s completely admissible if the “official vehicles are utilized sporadically for clearing domiciliary rubbish”.

But the advanced guidance, that is said to be implied from 2019 FBT (Fringe Tax benefit) states that “the employees are now allowed to utilize work or official vehicles for about 1000 Kilometers of personal travel every year, but an individual trip should not exceed 200 Kilometers.

If exceeded, there will be a FBT charge applied which will stand about 20% on the total value of the car.

The current modifications concur with the arrangements made by ATO to fissure the exorbitant claims on the dodgy works, it will also make sure to shut the $8.7 billion crevice for the 9.6 million taxpayers of the country.

This 1000 Kilometers hindrance for the employees will finally result in termination of holiday or weekend utilization of official vehicles, which is commonly known as utes in Australia.

The general use of four wheel drives and sedan cars belonging to the employer incorporating travel from and to work is totally covered-in as a fringe benefit, henceforth sustains tax. Nevertheless, there is a certain criterion for some utes vehicles which are consolidated as a tax-free perquisite.

Mr. Tony Greco, the general manager of IPA (Institute of Public Accountants) disclosed that ATO can finally thrust the compliance activities taking care of the changes made.

“Because of the load bearing capacity, passenger or ordinary vehicles are treated distinctly as compared to utes, which categorized them in the exempted vehicles” Tony Said.

“The rationale why sedan cars are exempted because previously utes were not treated as passenger vehicles. And were also not much considered socially”.

“Old times have changed and now utes are the new face of fashionable vehicle and are considered among all Australians”.

Subjected to employers, not employees:

The ATO finally cognized the feedback and realized the irregularities in the methodologies the employers were using associated with the compliance of car-related indemnities, which resulted in overall increment in compliance costs.

Mr. Tony also clarified, “This is completely not subjected to employees, as Fringe Tax benefit is related and paid by the employers”.

“Fuel monitoring can also assist you determining the total usage of the official vehicle happening in a period of time”.

Further, to curtail the private utilization of vehicles by employees, Mr. Tony revised the workplace policies and clinched that the FBT should be paid if the vehicle is used par the 1000 kilometer guidance.

“I believe that there is yet a rude awakening about to happen. The personal utilization made by the employees is thwacking employers to restrain the private usage of official cars”.

He also described that “There is a constant threatening by ATO to surveil the use. As they already took the license plates down by participating in several sporting and similar events”.

“Wherever non-compliance will be pinpointed, the officials work along with the employers to get the things flow in a right manner”, said the ATO spokesperson.

He further narrated that “We have an in place FBT engagement program which incorporates education components and significant communication to notify and help employers about the FBT responsibilities”.



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