PSA members have raised concerns that agencies are assigning the burden of the fringe benefit tax (FBT) on government cars, to employees who have not accessed government cars for private use.

Members have been required to take work vehicles home for garaging because there is no secure space at the work site. Generally home/work travel in a government car of this nature will be deemed private use by the Australian Taxation Office (ATO), and will be subject to FBT.

The FBT is payable by the employer, not the employee. However prior to 1 April 2007 the private travel could be a Reportable Fringe Benefit (RFB) that counts towards various Commonwealth income tested surcharges and allowances such as Family Assistance, Medicare Levy Surcharge and Superannuation Co-contributions.

RFB on pooled cars has been abolished from 1 April 2007 and should not be an issue in the future, but may have affected some members prior to that date.

In accordance with FBT law the Commonwealth Government requires that vehicle log sheets be completed. The FBT law requires that the employer report other fringe benefits such as salary sacrifice on the payment summary. In the case of missing kilometres on log sheets this is deemed as private use by the ATO. If the log book is not completed correctly all people in the team may have RFB shared among them. However, it can only be shared amongst those who have access for private use.

Not all travel in a government car attracts FBT, provided a log book is filled in. An example of non-FBT travel is driving a car home in order to travel to a non usual work location the next morning, where the person does not otherwise have regular private use of the car. Another example is where the person drives from a non regular work location where substantial work duties are performed (e.g. client visit, business meeting), and takes the vehicle home to return it to the worksite the next day.

Disability SA failed to notify staff that they needed to keep proper log books when using government vehicles. In line with ATO ruling, if a pool car log book has not been completed, the missing mileage is deemed private use and the FBT is shared between all staff in the pool. Because of the failure to notify, employees have recently been advised that if any employee has suffered a financial loss because of the amount of RFB appearing on their Group Certificate they will be compensated after they have lodged their 2006-07 tax return.

It is also worth noting that the Commonwealth Government has abolished RFB on pooled motor vehicles from lst April 2007. Therefore this will not be an issue in the future.

Members working in public hospitals or ambulance services who are salary sacrificing need to be aware that private use of a government car uses up some of the $17,000 capped FBT exemption and reduces their ability to salary sacrifice on a tax-free basis.

The PSA has raised concerns with Ms Sue Vardon, Chief Executive (Department for Families and Communities) and Dr Tony Sherbon, Chief Executive (Department of Health). Once a response has been received, the PSA will report back to its members. In the interim members are invited to provide any feedback they may have in regards to this matter.

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