The ATO sees a significant level of non-compliance in situations where an employer provides a motor vehicle to an employee (or their associate) for their private travel or makes it available to use privately.

Situations that concern the ATO include when employers:

• treat cars as 100% business use, even though they are used or available for private purposes
• don't have a valid log book, or the log book is not a representative sample of actual travel
• treat all eligible commercial vehicles as FBT exempt, without considering if the private use of the vehicle was limited.

To find out what you should do, see the ATO guide FBT on cars, other vehicles, parking and tolls.

Example: identifying private use

Eve is the owner and sole director of a company, Eve’s Consultancy Business Pty Ltd (ECB). Eve arranges for ECB to purchase a car, which she uses to visit clients and for other work-related travel.

Eve considers the car to be a business car because it is owned by the company and has a sign on the side with the business name. Therefore, ECB does not keep a log book and does not lodge an FBT return.

Based on ATO data and risk models, the ATO selects ECB for an FBT car review to check if the company is meeting its FBT obligations.

During the review, Eve explains that the car is garaged at her home and she uses it for her daily commute to the office.

The ATO advises Eve that:

• home to work travel is private use
• when a car is garaged at an employee’s home (as a director of ECB, Eve is considered an employee for FBT purposes), the car is considered to be available for their private use
• in both instances a car fringe benefit has been provided and FBT applies.

The ATO provides Eve with information about how to calculate FBT.  She agrees to lodge an FBT return for ECB.

Example: limited private use of eligible vehicles

BTE is an engineering business. It has a fleet of dual cab utes (with a carrying capacity of less than 1 tonne) and sedans, which its employees use to attend business sites and visit clients.

BTE considers that FBT doesn’t apply to the vehicles because the utes are eligible commercial vehicles and the sedans are only used for business purposes. Therefore, BTE does not lodge an FBT return.

Based on ATO data and risk models, the ATO select BTE for an FBT car review to check if the business is meeting its FBT obligations.

The review identifies that the sedans remain at the office and the utes are taken home by employees and used for private purposes (such as weekend sport and camping trips).

The ATO advises BTE that the private use of the utes must be limited to be an exempt benefit (see PCG 2018/3 Exempt car benefits and exempt residual benefits: compliance approach to determining private use of vehicles). The utes were used for extensive private purposes therefore these conditions have not been met. In this situation a car fringe benefit has been provided and FBT applies.

The ATO provides BTE with information about how to calculate FBT. The business lodges an FBT return.

ATO motor vehicle data matching program

The ATO matches data gathered from state and territory motor vehicle registry agencies. Vehicles that have been transferred or newly registered during the 2023, 2024 and 2025 income years and have a purchase price or market value equal to or greater than $10,000 attract ATO attention.  The ATO matches the data gathered with intent of identifying taxpayers who are not meeting their FBT registration, reporting, lodgement and payment obligations.

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Please also note that many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances. Should you have any further questions, please get in touch with us for assistance with your SMSF, business, bookkeeping and tax requirements. All rights reserved. Brought to you by RGA Business and Tax Accountants. Source including ATO QC 71179. Liability Limited by a scheme approved under Professional Standards Legislation.