When is private use ‘minor, infrequent and irregular’ for a potentially FBT-exempt car?

The concept of ‘minor, infrequent and irregular’ is not defined in the FBT Act, which makes it difficult for employers to determine whether the exemption applies.


Fortunately, the ATO released Practical Compliance Guideline (‘PCG’) 2018/3, which outlines the ATO’s approach in deciding whether the private use of an eligible workhorse vehicle is ‘minor, infrequent and irregular’.  Broadly speaking, if certain strict criteria in relation to the private use of a workhorse vehicle are satisfied, the ATO will provide a ‘safe harbour’ to treat the vehicle as having met the requirements to qualify as being FBT-exempt.


The workhorse vehicle must meet the following requirements to be eligible for this safe harbour treatment:

  1. The vehicle must have been provided to the employee for use in the performance of work duties.
  2. The vehicle had a GST-inclusive value less than the luxury car tax threshold applicable at the time it was acquired.
  3. The vehicle cannot be provided under a salary packaging arrangement and the employee cannot elect to receive additional remuneration in lieu of the use of the vehicle.
  4. The employer has a policy in place that limits private use of the vehicle and obtains an assurance from the employee that the policy has been adhered to. The employer must be satisfied (on reasonable grounds) that the private use of the vehicle was limited.
  5. The employee uses the vehicle to travel between their home and their place of work, and any diversion adds no more than two kilometres to the ordinary length of that trip.
  6. The total private use of the vehicle (other than home-to-work travel) in the FBT year must not exceed 1,000 kilometres, with no return private journey exceeding 200 kilometres.


Where an employer satisfies the above criteria, they do not need to keep records about an employee’s use of the vehicle that demonstrates that the private use of the vehicle is ‘minor, infrequent and irregular’. Furthermore, the ATO will not devote compliance resources to review whether the exemption applied for the vehicle provided to that employee.

If an employer is not eligible to rely on the safe harbour because one or more of the above criteria is not satisfied (or they choose not to rely on the safe harbour), they may still be eligible to treat a vehicle as an exempt benefit if it can be demonstrated that the private use of the vehicle is minor, infrequent and irregular. Further guidance on the concept of ‘minor, infrequent and irregular’ can be found in TR 2007/12.


Book Now