Director company car - FBT and other issues

Hi

Just a few quick questions about FBT on company cars.

1. Assume a person is a director of a company but is not an employee of the company, but the person drives the company's car. Everything in the ATO website keeps referring to an "employee" so, if a director is not an "employee", does that mean the FBT issues do not apply?

2. If FBT issues DO apply, what is the simplest way to deal with the issue if a log book has been kept and the log book shows approx 90% business use (ie 10% private use) on less than 10,000 km per year. For example, can 10% of the car running costs not be claimed as a deduction (paid instead by the director personally) or is there still a need to register for FBT, record it and pay in the BAS statements etc? We'd like the easiest possible way to handle the issue properly.

Many thanks

 

A director would be classed as an employee for FBT purposes.

see s136
FRINGE BENEFITS TAX ASSESSMENT ACT 1986

"current employee" means a person who receives, or is entitled to receive, salary or wages.

 

The director would also be an 'associate' as defined under s136
"associate" has the meaning given by section 318 of the Income Tax Assessment Act 1936 .


s 318 ITAA 1936
INCOME TAX ASSESSMENT ACT 1936 - SECT 318 Associates

 

Thanks Terry - much appreciated.

Any idea re the second part of the question re reducing the admin re compliance? Is it possible to (legally, of course) avoid registering, reporting etc re FBT by not claiming that % of costs that is private?

Ie: assuming the log books shows 10% private use: if 10% of car's costs are not claimed as expenses by the company, is that the easiest way to legally manage compliance re FBT?

Is there an easier way?

Thanks again