A sole trader purchases a motor vehicle which is used by a closely held employee for private purposes. This would make the vehicle a fringe benefit and therefore subject to FBT? Can the sole trader claim a tax deduction for the costs related to the provision of that motor vehicle?
As I understand it, the sole trader is employing a related person as an employee, and that related person is in a genuine employment role, really working for the sole trader. The sole trader is providing that related person with motor vehicle fringe benefits. On this basis, the answer is yes, the sole trader can deduct all costs related to the provision of that motor vehicle and will also be liable to pay FBT.
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