ATO Interpretative Decision
ATO ID 2001/313
Fringe benefits tax
Fringe benefits tax : exempt residual benefitFOI status: may be released
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This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Whether the use of a bus hired by an employer for the sole purpose of transporting employees to and from work is an exempt residual benefit under subsection 47(6) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA).
Decision
Yes. The use of a bus hired by an employer for the sole purpose of transporting employees to and from work is an exempt residual benefit under subsection 47(6) of the FBTAA.
Facts
The employer hired a bus to transport employees between the town where they resided and the nearby mine site at the beginning and end of each shift.
The employees paid a nominal amount per trip to the bus driver.
The employer paid the bus company the balance of the cost of hiring the bus.
Reasons for decision
Subsection 47(6) of the FBTAA provides that a residual benefit consisting of the "provision or use of a motor vehicle" will be an exempt benefit for certain motor vehicles where the private use of the motor vehicle is restricted to travel to and from work and other non-work-related use that is minor, infrequent and irregular.
The subsection does not apply if the motor vehicle is a taxi let on hire to the provider, or a car (other than a panel van, utility truck or other commercial vehicle not designed to carry passengers).
As the bus is neither a taxi or a car and was only used to take employees between home and work, the determinative question to be considered is whether the benefit consisted of the "provision or use of a motor vehicle".
The word "use" has a broad meaning. It is not restricted to situations where the employee has control of a vehicle. While the facts that the bus carried a number of employees on a pre-organised route and at pre-organised times enable the benefit to be described as the provision of transport; they do not alter the fact that the benefit consisted of "the use of a motor vehicle".
In National Australia Bank v. FCT (1993) 46 FCR 252; 93 ATC 4914; (1993) 26 ATR 503 Ryan J noted that the specific inclusion of "a taxi let on hire to the provider" in paragraph 47(6)(aa) of the FBTAA indicates that the legislature considered "use of a motor vehicle" could include a passenger's travel in a taxi. As a passenger's travel in a bus hired by the employer is comparable to a passenger's travel in a taxi, these comments support the conclusion that bus transportation can also involve the "use of a motor vehicle".
Amendment History
| Date of Amendment | Part | Comment |
|---|---|---|
| 20 December 2024 | Business Line | Updated business line details |
| 11 September 2015 | Reasons for Decision | Amendments to correct a grammatical error and clarify content |
Legislative References:
Fringe Benefits Tax Assessment Act 1986
Subsection 47(6)
Paragraph 47(6)(aa)
Case References:
National Australia Bank v. FCT
(1993) 46 FCR 252
93 ATC 4914
26 ATR 503
Keywords
Fringe benefits tax
Residual fringe benefits
Exempt benefits
Date reviewed: 6 December 2024
ISSN: 1445-2782
| Date: | Version: | |
| 10 August 2001 | Original statement | |
| You are here | 11 September 2015 | Updated statement |