QTPA Member Alert |Fringe Benefits Tax Processes (26/7/2013)

“Fringe Benefits Tax” are three little words most business people loathe with a passion.  The Australian Taxation Office (ATO) has advised that this is an area they are auditing yearly because they believe non compliance is high.  The latest method to increase compliance by the ATO involves the system of data matching income tax returns with information from each state government’s motor vehicle registration department for purchases of new motor vehicles.

This is a fairly simple process where the ATO data matching will be able identify a business which has purchased a car above $10,000 in value and then, once ownership is established, be able to identify businesses which are likely to provide car benefits to employees who do not lodge a fringe benefit tax return or include a fringe benefit reimbursement amount at the appropriate label of the income tax return.

Ignoring the issue, or hoping that an audit will never happen, is not going to solve the matter and discussions need to be held each year with your accountant.  The discussions needs to be specifically about:-
•    Is your business subject to FBT?
•    What record keeping is necessary for compliance?
•    Consequences of not keeping adequate records or non compliance.
•    Methods of dealing with the fringe benefits, either by the Fringe Benefit Tax Return or the elimination of the Fringe Benefit via employee reimbursements (where available).