Weekend toys, weekday tax: The real cost of ‘Work’ assets

By Tsae Liew and Tim Goodier

25 February 2026

The company car that goes to the coast on weekends. 
The ‘work’ boat that somehow only sails on public holidays.
The plane that flies just as often to family weddings as to client meetings. 

These three scenarios all have one thing in common - for Fringe Benefits Tax (FBT) purposes, the private use of company assets is firmly on the Australian Tax Office’s (ATO) radar. 

If it’s private, it’s a fringe benefit

At its core, the FBT law creates a broad net – when your business provides a non-cash benefit to your employee (or their associate) for private use, there’s probably a fringe benefit to analyse. When your company vehicle, aircraft or boat is used other than for purely business purposes, you’re usually ‘in the net’ for FBT. The question is rarely if FBT applies, but rather, it's how much FBT is applicable, whether any concessions or exemptions can soften the impact, and whether the evidence to support any such exemption/concession is on hand. 

You’re in, unless you’re out – exemptions and concessions

A common misconception is that ‘work vehicles’ are automatically exempt from FBT; this is not the case. 

You’re in the FBT regime by default unless you can clearly show: 

• An exemption applies (for example, certain narrowly defined work-related use), or 

• A concession reduces the taxable value (for example, valid employee contributions or supported business-use calculations). 

These outcomes are only as strong as the evidence behind them - this is where the ATO typically finds issues and filing positions often come undone.  

Data integrity is everything

FBT is a data-heavy tax – its time consuming for your team and responsibility often sits across different business functions; HR, Payroll, Tax, Finance and realistically, your EA and Office Manager. We understand the realities – additional work thrown on top of BAU - but unfortunately, this does not provide protection during an FBT review by the ATO. The onus of having audit-proof data sits with your business.

If you want to rely on business use percentages, minor benefits, or any concessional treatment, you need data that will stand up to scrutiny: 

• Valid logbooks – complete, minimum 12-week periods aligning with ATO record keeping requirements.  

• Contemporaneous entries – recorded at or around the time of use, not recreated in June. 

• Employee declarations – correct forms, signed, dated and obtained on time. 

• Odometer readings and service records – consistent with each other and the claimed pattern of use. 

If your logbook suggests a vehicle travelled 20,000kms but service records and odometer readings point to 35,000kms, expect questions. The ATO increasingly cross-checks this kind of data and mismatches are a red-flag, as was the case in the recent decision of MXSN and Commissioner of Taxation [2026] ARTA 186.

The type of asset matters – plane, train or automobile? 

Not all assets are treated equally for FBT. A key threshold issue is first determining what asset you’re providing to your employee – be it use of a company jet, a yacht for a ‘client function’, a car or even a motor vehicle (and yes, there is a clear distinction between both). This distinction matters because:

• Different valuation rules can apply, and

• Different exemptions or concessions may be available. 

You don’t need to be an expert in the definitions, but you do need to ensure someone in your tax or finance functions is. Getting it wrong can mean years of under or over-stated FBT – an error we often see and one firmly on the ATO’s radar. 

The ATO’s view: trust, but verify

The ATO expects employers to:

• Have clear policies on private use of company assets, 

• Maintain robust, consistent records, and 

• Apply exemptions and concessions conservatively and correctly. 

And when they come knocking, they will verify this. The ATO has sophisticated data matching capabilities which can align: 

• Business ownership of assets, 

• Broader integrated records (such as Department of Transport registrations, insurance policies, toll data, flight manifestos), and 

• Records you provide (such as logbooks, servicing records, declarations). 

What should you do now?

If your business allows for the private use of company assets, including vehicles (tool of trade or passenger vehicles), planes or other high-value assets by staff: 

1. Audit your records – confirm you have appropriate policies, declarations, logbooks etc in place
2. Confirm classifications – what type of asset are you providing and under what circumstances can it be used for private purposes?
3. Tighten processes – make contemporaneous record-keeping the norm, not the scramble at year end. 
4. Revisit exemptions – ensure you’re not over-claiming concessions based on weak or outdated assumptions.

The private use of company assets can be a valuable part of a remuneration package, but it’s important to remember – for FBT you’re potentially in the net from the moment the asset is used privately. Your only real protection is accurate classification, the right concessions and solid data governance to back it up.

Wherever you are on your business journey, learn more with our Private Business Life Cycle hub.