The tax regime applying to all fringe benefits is
highly complex, and professional advice should be
taken before planning any scheme designed to minimise
taxation. These notes are intended simply to give
a general overview and should not be relied upon as
a basis for action in any particular case.
employer provides a car (or other highway motor vehicle)
to an employee, his or her personal use of the car
is usually a taxable non-cash fringe benefit. The
employer must determine the actual value of this fringe
benefit to include in the employee's income.
employer-provided transportation can be excluded from
gross income. If the employer provides a qualified
transportation fringe benefit, it can be excluded
from the employee's income, up to certain limits.
A qualified transportation fringe benefit is:
in a commuter highway vehicle (such as a van) between
the home and work place;
transit pass, or
reimbursement by an employer for these expenses under
a bona fide reimbursement arrangement is also excludable.
However, cash reimbursement for a transit pass is
excludable only if a voucher or similar item that
can be exchanged only for a transit pass is not readily
available for direct distribution to the employee.
for combined commuter highway vehicle transportation
and transit pass fringe benefits cannot be more than
a total of $125 (2012) a month, regardless of the
total value of both benefits. The exclusion for the
qualified parking fringe benefit cannot be more than
$240 (2012) a month, regardless of its value. If the
benefits have a value that is more than these limits,
the excess must be included in the employee's income.
highway vehicle - this is a highway vehicle that
seats at least six adults (not including the driver).
At least 80% of the vehicle's mileage must reasonably
be expected to be:
transporting employees between their homes and work
trips during which employees occupy at least half
of the vehicle's adult seating capacity (not including
pass - this is any pass, token, farecard, voucher,
or similar item entitling a person to ride mass transit
(whether public or private) free or at a reduced rate
or to ride in a commuter highway vehicle operated
by a person in the business of transporting persons
parking - this is parking provided to an employee
at or near the employer's place of business. It also
includes parking provided on or near a location from
which the employee commutes to work in a commuter
highway vehicle or carpool. It does not include parking
at or near the employee's home.