Forgotten about your Fringe Benefits Tax (‘FBT’) obligations?
Don’t stress, there is still time to get your FBT sorted before you the ATO decides to conduct and audit! We are always reminding clients of the risks associated with ignoring their FBT obligations. FBT is one of our most unpopular taxes and one business owners tend to ignore – despite warnings. Why? Because the ATO has not focused its audit department on this tax. Plus the ability for businesses to ‘cash out’ the benefits meant that many did not lodge FBT returns. However, we don’t believe that “Burying your head in the sand” is smart strategy at all.
It was only a matter of time before the ATO started to aggressively audit FBT returns. The ATO has now stepped up the number of audits in this area and are quite upfront about the extensive nature of these.
How do the ATO identify potential audit candidates? A process of data matching across government databases, combined with public information, crosschecked with your tax return and compared to ATO benchmark data. Their resources are extensive and the investigation pre-audit is quite wide ranging.
From an Accountant’s point of view, most businesses provide FBT to some extent, however we operate in a self-assessment environment. That’s is, if you do not provide your Accountant with the correct information, they can’t provide you with the correct advice.
Fringe Benefits Tax is a tax on benefits provided to employees (remembering most business owners are employees too!) and their associates. If you have a motor vehicle in the business, pay for staff Christmas parties, dinners or gifts, pay for expenses of a personal nature on behalf of your staff then you are exposed to Fringe Benefits Tax. Rather than avoid your liability, we encourage you to work with Accountant to manage your position and minimise it as much as possible.
The FBT year ends on 31 March each year. If you’ve left it to the last minute, get in touch with your Accountant now to work out what you need to do to be compliant and to manage your tax position.
If you do not lodged an FBT return (and you need to), then expect a letter from the ATO soon. Lack of FBT compliance from businesses is making this a very lucrative area for the ATO audit team. Avoidance is not a clever strategy. Management of your tax position is!