Fringe benefits tax : exempt residual benefit

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).

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.

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.

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".

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

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