The 31 March FBT Deadline: Why a Ute & Smart Finance are a Founder’s Best Friends

As the 31 March Fringe Benefits Tax (FBT) year-end approaches, Australian business owners operating under a company structure have a unique "double-play" opportunity. By combining the ATO’s Limited Private Use exception with strategic Asset Finance, you can upgrade your fleet, slash your tax bill, and keep your capital working for you.

1. The Tax Hack: The "Exempt" Ute

For most company cars, if you drive it home, you pay FBT. However, the ATO provides a significant carve-out for "eligible vehicles," typically dual-cab or single-cab utes with a carrying capacity of over one tonne.

If your ute meets the design criteria and your private use is "minor, infrequent, and irregular" (think: trips to the tip or the occasional school run), the vehicle is FBT-exempt. This means the company can provide you with a high-value asset without the stinging 47% tax rate normally associated with fringe benefits.

2. The Finance Move: Asset Finance vs. Cash

While the tax exemption is great, paying cash for a $70,000 vehicle can cripple your working capital. This is where Asset Finance, specifically a Chattel Mortgage, becomes the superior strategy:

• Preserve Cash Flow: Keep your cash in the business for stock, hiring, or marketing while the vehicle "pays for itself" through monthly repayments.
• Upfront GST Credits: With a Chattel Mortgage, you can generally claim the full GST amount on the purchase price in your next BAS, even if you’ve only made one monthly payment.
• Interest Deductibility: The interest component of your finance repayments is typically tax-deductible for the company.
• Ownership from Day One: Unlike a lease, you own the asset from the start, meaning it sits on your balance sheet as a company asset.

3. Timing the Market: The 31 March Window

Why act now? The ATO has explicitly stated in their latest guidance that they are watching motor vehicle claims closely.

Taking delivery before March 31 allows you to:

1. Set the Baseline: Establish your "Limited Private Use" policy at the start of the new FBT year.
2. Instant Asset Write-Off: For the 2025-26 period, the $20,000 Instant Asset Write-Off is available for eligible small businesses. While most new utes exceed this price, you can still immediately write off the first $20,000 and move the remainder into a general small business pool for accelerated depreciation.
3. Beat Rate Hikes: With the RBA recently increasing the cash rate to 3.85%, locking in asset finance now protects you from potential further volatility in the lending market.

Summary: Your 3-Step Pre-March Checklist

• Step 1: Select a ute with a payload >1,000kg to qualify for the design exemption.
• Step 2: Secure a Chattel Mortgage to claim GST and interest benefits while keeping your cash liquid.
• Step 3: Take delivery before March 31 to align your records with the new FBT year.

Important Note: Always consult your accountant or tax professional. The ATO’s definition of "minor and infrequent" is strict. Make sure your logbooks and company vehicle policies are bulletproof before you hit the road.

All in all, don't let the 31 March deadline catch you off guard. We can help you secure a pre-approved Chattel Mortgage today, so you’re ready to take delivery of your new ute and lock in those tax benefits before the window closes. Get a finance quote here.