All you need to know about your company vehicle tax obligations during COVID-19

Company vehicles

The Australian Taxation Office (ATO) has published a fact sheet outlining how Fringe Benefits Tax (FBT) obligations relating to work vehicles may be impacted by COVID-19. The fact sheet assists employers in determining if they have a FBT liability where cars are garaged at an employees’ homes.

This fact sheet highlights the importance of keeping a valid logbook. Employers will only be eligible for FBT exemptions on vehicles where a logbook is being kept.

If you currently hold a logbook

If you are currently in the process of preparing a logbook while the lockdown occurred and the vehicle wasn’t used, you will need to have recorded the odometer reading at beginning of lockdown and at the end of lockdown to provide evidence it was not used during this period.

If you have a logbook which is less than five year’s old

If you have prepared a logbook in the past five years which is still valid, we recommend preparing a new logbook for the 2021 FBT year to reflect the reduced use of the vehicle for the year. This may have significant FBT savings now.

When things return to being a little more normal and the use of the vehicle increases again, we would recommend completing an additional logbook at this time.

If you currently do not maintain logbooks

Unfortunately, no concessions have been announced for FBT purposes if you assess your vehicles under the statutory formula method. Therefore, we recommend for the 2021 year to start preparing a logbook to reflect the reduced vehicle use.

Keeping valid logbooks

A logbook must be kept for 12 continuous weeks and should be representative of your travel throughout the year.

To be valid, your logbook must contain the following information:

• when the logbook period ends
• the car’s odometer readings at the start and end of the logbook period
• the total number of kilometres the car travelled during the logbook period
• the number of kilometres travelled for each journey recorded in the logbook (if you made two or more journeys in a row on the same day, you can record them as a single journey). You will need to record the:
  • start and finishing times of the journey
  • odometer readings at the start and end of the journey
  • kilometres travelled
  • reason for the journey.
• the business-use percentage for the logbook period.

Click here to view the full fact sheet.

Working from home

Many businesses have been forced to alter their operations and have employees working from home due to COVID-19. As a result, employers have provided employees with a range of items in an attempt to maximise efficiency by best reflecting their workplace set-up from each employees’ home.

These items will be exempt from FBT, should they be primarily used by employees for work. This includes items such as:

• laptops
• portable printers
• other electronic devices.

The minors benefits exemption or the otherwise deductible rule may apply if you:

• allow your employee to use a monitor, mouse or keyboard they otherwise use in the workplace, or
• provide them with stationery or computer consumables or pay for their phone and internet access.

The minor benefits exemption may apply for minor, infrequent and irregular benefits under $300. The otherwise deductible rule allows you to reduce the taxable value of benefits by the amount that your employee can claim a once-only deduction.

Emergency health care

There is an exemption from FBT if you provide emergency health care to an employee affected by COVID-19.

The exemption only applies to health care treatment provided:

• by an employee of yours (or an employee of a related company)
• on your premises (or premises of the related company)
• at or adjacent to an employee’s worksite.

If you pay to transport your employee from the workplace to seek medical help, the cost will be exempt from FBT. If you pay for your employee’s ongoing medical expenses, FBT will apply.

COVID-19 testing and the flu shot

Providing COVID-19 testing or flu vaccinations to employees will be exempt from FBT as they are work-related preventative health care.

You will not have to pay FBT for providing your employees with a voucher or reimbursement for getting the flu vaccine from a GP or chemist, as long as it is available to all employees.

If only some of your employees choose to receive the flu vaccine, the voucher or reimbursement is still exempt from FBT as long as it is offered to all employees.

Cancelled events

If employers are required to pay non-refundable costs for cancelled events that employees were due to attend, the cost will be exempt from FBT.

This is because:

• the arrangement was between you and the event organisers, not your employees, and
• you have not provided any fringe benefits to your employees as they did not get to attend the event.

You may have to pay FBT if your employees were required to pay for their attendance at the cancelled event and you reimbursed them. This would be an expense payment fringe benefit – unless the otherwise deductible rule applies.

If you have any questions in regards to the impacts of COVID-19 on FBT obligations, please give us a call on 03 5443 0344 or email us at FBT@afsbendigo.com.au.