Is your dual cab Ute really exempt from FBT?

The Australian Taxation Office (ATO) has recently released guidance to clarify a common misconception that dual cab Utes are automatically exempt from FBT.

The guidance released in October 2025 highlights the importance of understanding the relevant FBT exemptions and the supporting documentation that should be maintained by employers when applying this exemption.

Overview of FBT exemption

An FBT exemption is available for the use of a vehicle, where both of the following conditions are met:

1. Must be an eligible vehicle:
   • designed to carry a load of one tonne or more, or
   • designed to carry more than eight passengers, or
   • if under one tonne, not primarily designed for carrying passengers.
     
2. Vehicle must not be used for private purposes, except for:
   • travel between the employee’s home and place of employment; and
   • other private travel that is minor, infrequent and irregular (e.g. short detours during work trips or occasional trips to the tip).

ATO guidance clarifies that where the above conditions are not met, any private use of the vehicle will be subject to FBT. The exemption is not automatic, and employers are required to ensure the vehicles are not used for private purposes, except for the specific uses provided above.

Vehicle modifications may cost an FBT exemption

The ATO considers whether vehicles are primarily designed to carry passengers by comparing the load carrying capacity with the weight of passengers.  Australian Design Rules allow for a passenger weight of 68kg each.  If the total allowable passenger weight exceeds the remaining load carrying capacity, then the ATO considers the vehicle is primarily designed to carry passengers.

For example, if a dual cab Ute has a load carrying capacity of 700 kgs with 5 seats, 5 x 68kgs = 340 kgs.  The remaining load carrying capacity is 360 kgs.  As this exceeds the passenger weight, it is considered to be not designed for the primary purpose of carrying passengers, so remains available for the exemption.

However, if that vehicle had a bull bar, tow bar and winch fitted weighing 50 kgs, the available load carrying capacity of the vehicle is reduced to 650kgs.  In this instance, the 340kg weight of the passengers exceeds the remaining 310kg capacity and causes the vehicle to no longer be eligible for the exemption.

How to determine “minor, infrequent and irregular” usage?

As the term “minor, infrequent and irregular” private use is not clearly defined in the tax legislation, the ATO has released Practical Compliance Guideline PCG 2018/3 to provide a “safe harbour” approach for employers.

Summary of conditions under PCG 2018/3

Where employers satisfy the conditions above, the ATO will not apply compliance resources to determine if private use of the vehicle was limited for the purposes of the FBT exemptions.

Key takeaways and next steps

• Providing employees with a dual cab Ute does not automatically qualify for an FBT exemption. It is important to ensure all the relevant conditions have been met, before applying the exemption.
• Employers are encouraged to review fleet vehicles and identify whether there may be any risks with the application of FBT exemptions, for the private use of these vehicles.
• To rely on the ATO’s “safe harbour” approach, employers should implement policy documentation restricting the private use of the vehicle and receive signed acknowledgement from employees that usage of the vehicle is in accordance with the policy.

If you would like further information on the application of FBT exemptions for dual cab vehicles, or if you require assistance with reporting and minimising your FBT liability, please contact your usual Exant adviser, or our Tax Partner, Jamie Towers on 07 3218 3900.

Author: Preethi Pasumarty