When is travel between home and work subject to FBT?

In Australia, Fringe Benefit Tax can apply when a work vehicle is used for private purposes. The Australian Tax Office’s MT 2027 ruling outlines how travel between home and work is treated for FBT purposes, and the limited situations where it is considered business use not private.​

We’ve pulled together a summary to give you the crucial details on when the commute between home and work may be classified as a ‘fringe benefit’ and the key exceptions.​

We have a whole article on Fringe Benefit Tax, but in this context, if you have a work vehicle that is available for ‘private use’, then there is usually a fringe benefit.​

‘Private use’ includes not only travel that benefits you personally, such as driving to/from the supermarket, or driving to social engagements/activities, but also includes your daily commute between home and work.​

As a general rule, travel between your home and workplace is considered a personal expense.​

However, there are some exceptions.​

Even though the general rule says home-to-work travel is private, there are specific situations where it's treated as work-related travel and won't be subject to FBT.​

If you must use the vehicle to carry tools, instruments, or other essential work items that you need for work, both at home and at your workplace, and these items are too bulky, valuable, or sensitive to transport otherwise, then your travel is likely not private use. Your own transportation is considered "incidental" to moving the equipment.​

Example: A musician who transports bulky instruments between their home (where they practice) and a concert hall (where they perform) in an employer-provided vehicle, especially if the vehicle is only for this purpose.​

If your job inherently involves a lot of travel to different workplaces throughout the day and there is no fixed workplace, then travel from home to your first job, and from your last job back home is considered work-related.​

Key factors include:​

Example: A community nurse visits several patients each day across different suburbs, starting and ending the day at home. Their patient list constantly changes and travel is essential to their duties.​

If you are required to respond to emergency calls from home, and your responsibility for the task begins before you leave home, then the travel to the emergency and back home is not private use.​

Example: A person on-call for responding to and assisting with vehicle breakdowns receives a call and begins diagnosing the problem over the phone before driving to the site.​

Someone simply on call, who won’t commence work until they arrive at the workplace is not covered under this exemption as the travel would still be considered private in nature.​

Travel from home may be treated as business-related if the vehicle is taken home to begin a work trip the next day without first going to the regular workplace. The trip home the previous night is incidental to the journey the next morning. ​

This exemption does not apply where someone has regular use of the car.​

Example: Jordan is a civil engineer employed by a construction firm based in Melbourne. One afternoon he takes the employer-provided vehicle home instead of returning it to the office. This is because the next morning he must travel directly from his home in Geelong to a remote construction site in Ballarat to supervise works. He'll spend the entire day at the site before driving home that evening. The trip from Geelong to Ballarat is business-related as Jordan is travelling from home to a temporary work site to perform his duties. The drive home the night before is incidental to the start of the business journey the following day.​

This is a high bar to meet. It means your home is genuinely a primary place where you must do your work because of the nature of the job itself, not just because you prefer to work from home.​

Factors considered include:​

Simply choosing to work from home or allowing your employees to (even to save rent) is generally not enough to make your home a "workplace" for FBT purposes if the job could be done entirely in an office (or location outside of the home).​

Example: A self-employed electrician, Sam, runs his business from home. He stores tools, equipment, and materials in his home garage and completes all his job scheduling, quoting, and invoicing from a dedicated home office. Each day, Sam drives from home directly to different customer sites to carry out electrical work.​

Simply taking a work vehicle home for security, convenience or to charge an electric vehicle does not make the travel work-related. The journey still serves the private purpose of getting to and from work.​

Unlike some income tax rules, carrying tools or equipment in a vehicle for work purposes does not automatically make home-to-work travel exempt from FBT. Unless the travel falls within the ATO's recognised exceptions, it is still considered private use.​

There are also specific statutory exclusions that can apply, meaning FBT won't be charged in certain situations, such as:​

In most cases, the daily trip between home and your place of work is considered private travel and will attract FBT if the work vehicle is available for that use.​

For further information, you can access the whole Tax Ruling from the ATO at https://www.ato.gov.au/law/view/document?docid=MTR/MT2027/NAT/ATO/00001​