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If your employee's company car use meets these four requirements, it's tax-free

by , 14 August 2014
Company cars are one of the most discussed fringe benefits. Because of their high value, they result in high fringe benefit tax on your employee. This isn't something you or your employee want.

The good news is you have a bit of wiggle room when it comes to this taxable fringe benefit.

That's right! You can legally reduce your employees fringe benefit tax depending how, why and when he uses it.

In fact, if your employee's company car use meets these four requirements it'll be tax-free.

 

The four requirements your employees company car must meet to be tax-free

 
Your employee can use the company car completely tax-free, but only if his use meets these requirements:
 
1. The car is available to all of your employees for their general use. This could, for example, include office car pooling.
2. Your employee's private use of the car is infrequent or merely incidental compared to its business use.
3. Your employee doesn't keep the car at or near his home when he isn't using it.
4. The nature of his duty requires him to regularly use the car to do his job outside of his normal office hours. (For example, if he's a 24 hour plumber and has to keep the car overnight in case he gets a call to go to a job.)
 
And remember your employee needs to use this tool to prove that his use meets these requirements...
 
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Your employee must use this tool to prove his company car use is legit
 
You employee must keep a detailed logbook to prove his use meets these four requirements so he can avoid tax on it. 
 
There you have it, now you know how your employee can use the company car completely tax-free.
 


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