ATO Interpretative Decision

ATO ID 2011/28

Fringe Benefits Tax

Car fringe benefits: car destroyed in natural disaster
FOI status: may be released

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CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

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If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.

Issue

Where a car is destroyed in a natural disaster, is it still considered to be a car that is held by the employer for the purposes of subsection 7(1) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)?

Decision

No. It is no longer considered to be a car from the date it was destroyed for the purposes of subsection 7(1) of the FBTAA.

Facts

A car which is held by an employer in an FBT year is provided to an employee for their exclusive private use.

Part-way through the FBT year the car is burnt out in a bushfire. Prior to being removed some time later, it remained at the employee's residence where it had been incinerated.

Due to the scale of the natural disaster, insurance assessors cannot determine any claims for a considerable time after the bushfire.

Reasons for Decision

A car fringe benefit will arise under subsection 7(1) of the FBTAA only where a car held by the provider is available for the private use of an employee. Under section 162 of the FBTAA, a car is held by a person where it is owned, leased or otherwise made available to the person by another person.

A car is defined under subsection 136(1) of the FBTAA as having the same meaning given by subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997). A car is defined in subsection 995-1(1) of the ITAA 1997 as a 'motor vehicle...'.

In turn, motor vehicle is defined in subsection 136(1) of the FBTAA as having the same meaning given by subsection 995-1(1) of the ITAA 1997. The definition of motor vehicle in subsection 995-1(1) of the ITAA 1997 is 'any motor-powered road vehicle (including a 4 wheel drive).'

Where a car has been destroyed as a result of a natural disaster, then it ceases to be a motor-powered road vehicle from the date of the natural disaster. The vehicle is simply no longer capable of operating as a road vehicle and is therefore no longer a car as defined for the purposes of the FBTAA. As such the holding period also ends at that time in accordance with section 162C of the FBTAA. There is no requirement that an insurance assessor make a determination that the vehicle is a 'write-off'.

In these circumstances the calculation of the taxable value of the car fringe benefits provided will only take into account the period up to the date of the natural disaster. After the natural disaster the vehicle is no longer considered to be a car.

Amendment History

Date of Amendment	Part	Comment
16 December 2016	Decision	Minor punctuation amendment
	Reasons for decision	Minor punctuation amendments

Date of decision: 5 April 2011

Year of income: Year ended 31 March 2011

Legislative References:
Fringe Benefits Tax Assessment Act (1986)
   subsection 7(1)
   subsection 136(1)
   section 162
   section 162C

Income Tax Assessment Act 1997
subsection 995-1(1)

Keywords
Fringe benefits tax
Fringe benefits
Car fringe benefits
FBT car
FBT motor vehicle

Siebel/TDMS Reference Number: 1-2QQ1ABG; 1-5QRLON8, 1-AFDLCE8

Business Line: Private Groups and High Wealth Individuals

Date of publication: 8 April 2011
Date reviewed: 29 November 2016

ISSN: 1445-2782

history

	Date:	Version:
	5 April 2011	Original statement
You are here	16 December 2016	Updated statement

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