It's Autumn!   Which means it's time for FBT, yeh?

Fringe Benefits Tax (FBT)

The FBT year runs from 1 April to 31 March, and if required, an FBT Return must be lodged and paid by 31 May.

It is an area of focus this year for the ATO because there is a high level of misunderstanding among employers and it can raise a lot of tax.   If benefits are provided to employees and these are not recognised nor taxed as income, then it is necessary to register and pay FBT.

What is Liable for FBT?

The key areas are:

- Vehicles available and used for private purposes

- With cars, the keeping of an up-to-date, accurate log book means you only claim the actual business use, so FBT is not payable because no private use is claimed in the tax return

- Private expenses paid for employees (like school fees, holidays)

- Providing employees with accommodation or a living-away-from-home (LAFH) allowance

- Entertainment for employees, including recreation, eg., tickets to a sporting event

- Others - loans at lower interest rates, forgiveness of debts, salary sacrifice arrangements other than superannuation, and goods purchased at a lower price than the public pays.

What is Exempt from FBT?

Work related items used in employment, like electronic devices, protective clothing, tools of trade.   The key test is - if it is tax deductible to the employee of the employer, it is probably not a fringe benefit.

Our Approach

One of the reasons we ask so many questions is not because we're too lazy to read last year's notes but to find out if these liabilities could have changed this year.   The financials do not always tell us the whole story.   Very few of our clients are actually registered for FBT because we do try to legally avoid any FBT liability.

This year we propose to:

- Send out this warning letter so you are aware of the FBT concerns, and if you think you need to register, please call us.

- Send out a Questionnaire early next week to help you determine if an FBT liability has been incurred.

- Ask you to consider private use of cars/non-commercial vehicles; particularly has a log book been kept, is it current, is the vehicle a car for FBT purposes (capacity less than 1 tonne and carry fewer than 9 passengers)?

- If you don't think FBT applies you could simply reply to our email questionnaire with a 'no'.   If you need some help, call or email me soon to discuss it.

ATO Audit Hot Spots FBT 2014

a) Cars (especially high value vehicles).   Many 4WD's, SUV's are not commercial vehicles.

b) Corporate boxes, hospitality, and entertainment

c) Benefits provided by third parties (say, where a client provides a box and hospitality at a sporting event).

Next Step

We expect most clients will not need to register.   However, there have been significant changes over the last 3 years and FBT needs to be considered now, it will be too late with the tax returns next year.

If you need to register, we will complete this for you and then contact you to obtain the required information and to lodge the return.