Utilising The Fringe Benefits Tax

Further defined, the term 'Private Use' is interpreted as the following:

A car is taken to be available for the private use of an employee on any day they or their associates use it, or are allowed to use it, for private purposes.

If a car is garaged at or near the employee's home, even if only for security reasons, it is taken to be available for their private use regardless of whether or not they have permission to use the car privately.

Similarly, where the place of employment and residence are the same, the car is taken to be available for the private use of the employee.

Generally, travel to and from work is the private use of a vehicle.

How Can I Make FBT Reporting Easier To Manage?

The simplest method to make FBT reporting on company vehicles easier to manage, is not to provide your employees with company vehicles, but allow employees to use their own vehicles and claim travel-related expenses.

These travel-related expenses are generally claimed at a rate per kilometer traveled for business purposes.

This method is generally not economical for organisations, especially where employees require frequent use of vehicles to perform their duties.

Example: Sales and Service staff.

Some organisations provide general use of pool cars, where staff come to the office each day using their own method of transport and use a company pool car during the course of the day to conduct their activities.

Once again, this may not be the optimum solution for sales and service staff, as additional productivity may be gained each day by starting and finishing work from home rather than traveling to and from the office each day.

Another method to reduce the FBT administrative reporting burden is for organisations to elect to use the statutory method and pay the FBT on 20 percent of the purchase value of the motor vehicle. However, this method may not be the optimum in minimising FBT obligations.

Therefore the optimum method may be the 'logbook method' which determines the amount of tax payable based on the percentage of private use of the motor vehicle. However, this requires administrative burden on-field staff, admin staff and the organisation in general.

As a result, many companies are turning to GPS tracking devices, apps and other forms of telematics to keep track of business and private use of motor vehicles to substantiate their claims for Fringe Benefits Tax.

What Apps or Tracking Devices can help manage FBT logbooks?

There are many apps and GPS Tracking systems available on the market claiming to be the perfect FBT Electronic Logbook Solution, but most are simple journey recording devices and still require substantial effort and administration in preparing FBT substantiation documentation.

These range from simple apps that will ask drivers to record the start and end and purposes of their journeys. The app then calculates the distance traveled using GPS.

Some of these apps are a little more advanced and have the ability to record the Make, Model, Year, Number Plate of the vehicle along with the starting odometer value.

In essence, these apps are great, but experience tells us that drivers will quickly forget to enter the trip details for each journey.

At other times the employee may be ridesharing or on public transport and the app will assume they are driving a company vehicle.

As you can see it gets very messy and inaccurate very easily

There are many plug and play cigarette lighter type GPS tracking devices purporting to be FBT logbooks.

These too have similar issues, as they are not matched with drivers or vehicles and can be easily unplugged from the cigarette lighter socket causing inaccurate data. These devices do not work well in pool cars or vehicles driven by multiple staff.

In addition, FBT legislation requires a business trip to be recorded with the purpose of the business trip as a description.

Basic GPS Tracking trip recorders are unable to do this.

The optimum FBT Electronic Logbook Solution should provide the following functionality :