Tax and Cars Part 2: One-Tonne Utes and Commercial Cars
In this second part of our Tax and Cars series, we look at a vehicle type that’s central to the way many West Australians work and travel: one-tonne Utes and commercial vehicles. For tradies, business owners and even professionals, these vehicles go beyond just practical, they can provide significant tax advantages that many Perth tax accountants use for their clients.
But not all Utes are created equal, and not all commercial vehicles qualify for tax breaks. Here’s what you need to know.
What is a “One-Tonne Ute” for Tax Purposes?
From the ATO’s perspective, a one-tonne ute is a vehicle with a payload capacity greater than 1,000 kg, calculated using this formula:
This is a manufacturer-specified rating, and it relates strictly to carrying capacity, not towing capacity.
This threshold is critical because it influences whether the vehicle is classified as an “exempt vehicle” for fringe benefits tax (FBT) purposes. If the payload is over one tonne and private use is minimal, the vehicle may be exempt from FBT when provided by an employer.
Payload is Not Towing Capacity
It’s easy to confuse the two, especially with modern Utes advertising 3.5-tonne towing capacity. But the tow capacity does not matter for tax purposes — only the payload does.
Let’s look at two popular vehicles.
Vehicle Comparison: Ford Ranger Super Duty vs VW Amarok
| Vehicle | GVM (kg) | Kerb Weight (kg) | Payload (kg) | Towing Capacity (kg) | Meets One-Tonne Rule? |
| Ford Ranger Super Duty | ~3,500 | ~2,200 | ~1,300 | 3,500 | Yes |
| VW Amarok (Style TDI600) | ~3,200 | ~2,250 | ~950 | 3,500 | No |
The Ford Ranger Super Duty easily clears the one-tonne payload requirement, making it a solid option for businesses looking to avoid FBT. In contrast, the VW Amarok Style (and several other dual-cab variants) typically falls short, meaning it would not qualify for the exemption without further substantiation or structuring.
What About Vehicles Like the Ford Econovan?
Not all FBT-exempt vehicles need to be one-tonne utes.
Vehicles like the Ford Econovan, Toyota HiAce, or Hyundai Staria Load may not exceed the one-tonne payload test, but they can still qualify as exempt vehicles based on design and use.
ATO guidance looks at whether the vehicle is principally designed to carry goods or equipment (as opposed to passengers).
If it has:
- Minimal seating,
- A dedicated cargo area, and
- Design characteristics aligned to goods transport
Then it can still be exempt from FBT — even if the payload is under 1,000 kg.
FBT and the One-Tonne Ute
Employer vs Employee
If you’re an employer, providing a qualifying one-tonne ute (like the Ford Ranger Super Duty) or goods-carrying vehicle can bring serious benefits:
- No FBT liability under the “exempt vehicle” provisions, if private use is limited
- Tax deductions on operating costs
- GST credits on purchase and expenses (subject to usual GST rules)
To rely on the exemption, private use must be minimal — think home-to-work travel and small detours. The ATO’s PCG 2018/3 outlines acceptable limits.
If you’re an employee, it is nowhere near as good. You will have to substantiate your claim. The logbook exemption applies to the employer.
Other Ways to Avoid a Logbook
If you’d prefer not to deal with logbooks, here are some legitimate strategies:
- Use the FBT exemption for one-tonne utes and commercial vans (for employers only)
- Cents per km method (only for passenger vehicles under the luxury car threshold and up to 5,000 business km)
- Statutory formula method (employers may use this for cars, but it typically results in a higher FBT burden)
Even without a logbook, remember you still need objective evidence of business use to satisfy s. 8-1 of ITAA 1997 for deductions.
Cost Comparison: One-Tonne Ute vs Passenger Car
Let’s run the numbers on a five-year ownership scenario.
Assumptions:
- Vehicle purchase price: $60,000 incl. GST
- 70% business use
- No FBT on the ute; full FBT on the car
- Company pays the costs
| Ford Ranger Super Duty (Ute) | Passenger Car | |
| Purchase Price (ex-GST) | $54,545 | $54,545 |
| GST Claimed | $5,455 | $5,455 |
| Annual Depreciation (D/V) | $6,545 | $6,545 |
| Annual Operating Costs | $5,000 | $5,000 |
| FBT Cost to Employer | $0 | ~$4,800 |
| 5-Year Net Cost | ~$27,500 | ~$51,500 |
Outcome: A one-tonne ute like the Ranger Super Duty can deliver significant tax savings – especially when structured correctly and backed by proper documentation.
Final Word
The tax benefits of a one-tonne ute or commercial van are real — but so are the tax compliance traps. Whether you’re looking at a Ford Ranger Super Duty, a Toyota HiAce, or a VW Amarok, it’s essential to match the vehicle to your business and your tax position. If you’re not sure whether a vehicle qualifies — or how to structure the purchase — get advice before you sign the paperwork.
Need tax-smart advice on buying your next work vehicle?
Westcourt Family Business Accountants can help you maximise deductions, minimise FBT, and make the smartest vehicle choice for your business.
Reach out today — and drive your business further.