Tag: FBT return


FBT Issues on ATO Radar

With the date for lodging and paying FBT approaching (21 May), on Wednesday 1st May, the ATO reminded employers that the following mistakes attract the ATO’s attention:

*         failing to report car fringe benefits, incorrectly applying exemptions for vehicles or incorrectly claiming reductions for these benefits

  *   mismatches between the amount reported as an employee contribution on an FBT return compared to the income amounts on an employer’s tax return

  *   claiming entertainment expenses as a deduction but not correctly reporting them as a fringe benefit, or incorrectly classifying entertainment expenses as sponsorship or advertising

  *   incorrectly calculating car parking fringe benefits

  *   not applying FBT to the personal use of an organisation’s assets provided for the personal enjoyment of employees or associates (e.g. spouses) and

  *   not lodging FBT returns (or lodging them late) to delay or avoid payment of tax.


31 March marks the end of the Fringe Benefits Tax year. This article aims to assist employers to get their affairs together with a view to ascertaining and minimising their 2016/2017 FBT liability.

While it will generally fall to your Accountant to:
  • Determine whether a fringe benefit has been provided by you to an employee or their associate (e.g. spouse)
  • Determine whether an FBT exemption applies
  • Determine the taxable value of your fringe benefits
  • Ascertain your FBT liability
  • Complete and lodge your FBT return….

… there is something you can do to assist with this process.You may wish to collate/detail all the instances where a private expense of an employee has been paid for by the business. If you or one of your employees is responsible for maintain the accounting software file (entering and coding each transaction undertaken by your business) ensure that the file is in good order. From an FBT perspective this involves coding personal expenses paid by the employer to an “employee benefits (FBT)” account in the management accounts. This will alert your Accountant to the existence of a potential fringe benefit.

Operating Cost Method
If you use the Operating Cost Method to calculate FBT on motor vehicle usage, in order to calculated the private use percentage (and therefore the FBT payable), you will need to maintain a valid log book recording your usage of the vehicle over a 12-week sample period. Failure to do so, will result in the entire use of the vehicle being subject to FBT (therefore, it’s vital to have a valid log-book). Provided there has been no substantial change in the usage of your vehicle (in terms of the mix between work and personal use) a new log book mush be prepared it one was not prepared for any of the previous four years.

Therefore, if you first kept a log book for 2011/2012 FBT year, you are required to have kept a new log book for the current 2016/2017 FBT year. Leading up to the end of March, if you do not yet have a valid 2016/2017 log book, don’t panic! Although we are now right at the end of the FBT year, it is not too late to keep a log book to substantiate the private use of the vehicle for 2016/2017.

Log books can commence as late as right at the end of the FBT year even though the end of the 12-week period for which it needs to be maintained may extend beyond the end of the FBT year in which the log book commenced. You can purchase a log book from you local Newsagent or you can download one of the innumerable log book apps on the market, either from the AppStore or Googleplay as the case may be.

Upon completion, ensure the log book contains the following information, in English:
  • Car details, including registration number
  • The date the journey began and the date the journey ended
  • Odometer readings at the commencement and conclusion of each journey
  • Number of kilometres travelled by the card in the course of the journey
  • A description of the purpose or purposes of the journey (generic descriptions such as ‘business trip’ are not adequate)
  • Business and private kilometres travelled (although this is not a legislative requirement, it may help with collating data for FBT purposes).

Also ensure that if using the Operating Cost method, you capture the odometer reading at every 31 March. Furthermore the Statutory Formula Method is the default option therefore to use the Operating Cost Method the employer should have an election in place.

To read the complete article please see the ATR Bi Monthly update for Mar/Apr 2017 – this can be accessed via your exclusive ATR Members Area https://www.mytaxsavers.com.au/login

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