Fringe Benefits Tax for Residential Builders (Vehicles + Accommodation)

What it is

Fringe benefits tax (FBT) is a tax on benefits you give to employees (or their associates) that are not salary or wages. For a residential builder, that usually means company utes, company cars and sometimes accommodation for fly in fly out or remote site workers.

FBT is paid by the employer, not the employee. The FBT year runs from 1 April to 31 March, so the FBT year ending 31 March 2026 runs from 1 April 2025. The FBT rate is 47% and applies to grossed up taxable values for the FBT years ending 31 March 2023 through 31 March 2027.

Cars and dual cab utes

A car fringe benefit arises when you make a car available for the private use of an employee. There are two methods to calculate the taxable value: the statutory formula method and the operating cost (logbook) method.

Statutory formula

The statutory formula uses a flat 20% statutory rate of the car base value (cost price) regardless of kilometres travelled. The 20% rate has applied since 1 April 2014. For a $60,000 ute, the annual taxable value is roughly $12,000 before any employee contributions.

Operating cost method

The operating cost method needs a 12 week logbook every five years and tracks the business-use percentage. For a builder whose ute is 90% business use, this method usually beats the statutory formula by a wide margin.

The dual cab ute exemption

A vehicle is exempt from FBT for "minor, infrequent and irregular" private use if it is one of these:

• A panel van or utility designed to carry a load of less than one tonne
• A vehicle designed to carry a load of one tonne or more
• A vehicle designed to carry more than eight passengers
• A vehicle not designed primarily for carrying passengers

For dual cab utes, the test is whether the vehicle is primarily designed for carrying goods. If the principal purpose is goods (more than half the load capacity is for goods, not passengers), it qualifies. Practical private use must be minor and infrequent, such as travel between home and work and the occasional trip to the tip. The ATO has guidance (PCG 2018/3) setting out safe harbour conditions including travel between home and work, no more than 1,000 km of private travel outside this in the FBT year, and no single private trip exceeding 200 km.

If you use the ute to tow the family caravan to the coast every weekend, the exemption is gone and FBT applies on the full statutory value.

Accommodation for employees

Housing fringe benefits arise when you provide accommodation to an employee as their usual place of residence. For a residential builder this can come up with apprentices boarding in a granny flat at the boss's house, or live in caretakers on a remote build.

The taxable value is generally the market rental value of the accommodation minus any employee contribution. So if a unit rents for $500 a week and the apprentice pays $100, the fringe benefit is $400 a week.

Living away from home allowance (LAFHA)

If an employee is required to live away from their normal residence for work (for example, a leading hand sent from Sydney to a remote regional build), you can pay a Living Away From Home Allowance instead. Reasonable food and accommodation components are not subject to FBT if specific conditions in the FBT Assessment Act 1986 are met, including the employee maintaining a home in Australia and a 12 month maximum at a single work location.

Remote area concessions

Section 60 of the FBT Assessment Act provides a 50% reduction in the taxable value of accommodation provided in a remote area. "Remote area" is defined by reference to distance from population centres and an ATO list. For builders working in remote mining towns or remote regional builds, this is worth checking.

Reportable fringe benefits amount (RFBA)

If an employee's total taxable value of fringe benefits in an FBT year exceeds $2,000, you must include the grossed up reportable fringe benefits amount on their income statement. The RFBA does not increase the employee's income tax, but it counts for Medicare levy surcharge, HELP repayments, child support and certain government benefits.

FBT employee contributions

Employees can reduce FBT liability dollar for dollar by making after tax contributions toward the cost of the benefit. A common arrangement is for the employee to pay all running costs of a company car personally, which reduces the taxable value.

Records and lodgment

The FBT return is due 21 May (paper) or 25 June (lodged through a tax agent) following the end of the FBT year on 31 March. You need to keep:

• Logbooks for cars using the operating cost method
• Tax invoices for running costs
• Calculations of taxable value for housing benefits
• Records of employee contributions and reimbursements
• Employee declarations where required

Practical tip for builders

Most one ute residential builders qualify for the dual cab ute exemption if they police private use. Document it with a written policy, occasional logs of private trips, and clear messaging to drivers. Where private use creeps up (regular weekend caravan towing, spouse using the ute as the family car), move to the operating cost method with a 12 week logbook to keep the taxable value honest.