10 FBT Tips You Can’t Ignore
It’s not long until the end of the Fringe Benefits Tax (FBT) year on 31 March 2012. Here are 10 FBT Tips you shouldn’t ignore before lodging the 2012 FBT return.
1. Check last year’s FBT return.
The good news is that there have been no significant legislative changes to FBT over the past year, so you can use your 2011 FBT return as a guide. However, be mindful of court and ATO decisions made during the last twelve months.
2. Cross reference your company tax return.
The ATO scrutinises both the FBT and Company Tax Return for discrepancies. Areas to watch for are car expenses and employee contributions.
3. No need to lodge.
The ATO now accepts that employers with no FBT liability do not need to lodge a FBT return, even if they provide fringe benefits to their employees. However, if you choose not to lodge, you may need to have evidence to support your ‘nil’ FBT payable position in the event of an audit.
4. Changes to other taxes.
Under changes to income tax rules, company assets used by employees who are shareholders or associates of shareholders can be deemed dividends. It’s critical to be aware of this as they often result in large tax bills for the employee/shareholder.
5. Check car receipts.
Many employees who salary sacrifice cars make after-tax contributions to reduce or eliminate FBT, often in the form of a cash payment and unreimbursed petrol costs. Yet employees frequently ignore the non-car expenses on their receipts.
6. Cost of a car.
The ATO has finalised the Taxation Ruling on how certain arrangements affect the ‘cost’ of a car. It’s essential reading for employers that provide car benefits.
7. Car odometer readings.
When using the km method for calculating the taxable value of a car, it’s very important to have both opening and closing odometer readings.
8. Use of utes.
Many businesses believe they can provide an FBT-free ute to their employees because it is a work-style vehicle. It is only FBT free if it is used for business purposes, home to work travel, and for other minor and infrequent private use. The ATO have allegedly selected some audits based on the registration numbers of utes parked at footy grounds.
If employees make after-tax contributions in respect of their car benefits, GST is payable and must be remitted to the ATO by their employer. There is no GST payable on unreimbursed petrol costs.
10. Living Away From Home Allowances.
It’s important that employers are able to demonstrate the employees are actually living away from their usual place of residence, that the work contract supports this conclusion and that a copy of the ‘Living away from usual place of residence’ declaration is readily available.
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