ATO cracking down on tradies dodging the fringe benefits tax

The Australian Tax Office is cracking down on tradies who are wrongly not paying fringe tax benefits for their vehicles.

Businesses can save thousands a year by providing dual cab utes to employees, as they do not have to pay fringe benefits tax.

But the tax exemption comes on the condition that employees only use their work cars in their personal time infrequently.

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The fact that dual ute cabs, such as a Ranger or Toyota Hilux, are now the most popular cars on Sydney roads has sent alarm bells ringing at the ATO about how businesses may be using them.

"You can drive to or from work but you can't be using it to go fishing every single weekend or to go and use it as your personal car," James Ward from Drive told 9News.

"That whole dual-use capability where it can be a work vehicle during the week and family play and adventure vehicle on the weekend is definitely where the appeal is."

Tax officers suspect employees are using their work utes far more than infrequently.

"As soon as people are not using them infrequently for private purposes, they become subject to FBT and the employer has a bill that they need to contend with," Chartered Accountants Australia Spokesperson Susan Franks said.

Tax officers will check state registration data and other available information to make sure businesses are doing the right thing.

"The emphasis is going to be on employers, they're going to have to show they've got policies where they actually enforce restrictions on the use of the vehicles, ensuring vehicles are only used for work-related purposes," Franks said.