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ATO Fringe Benefits Tax “FBT” Audit Activity
The ATO is continuing to increase its FBT audit activity. In 2012, the ATO audit focus will be (amongst others) on
ensuring employers meet all their FBT obligations with a particular focus on Living Away from Home Allowances
and Motor Vehicle Fringe Benefits. The ATO intends to target those employers who may be required to be
registered but aren’t and those who are registered but are not including all benefits on their FBT returns.
With the increased audit activity this year, it is more important than ever that you consider whether you should be
registered for FBT. We can help you determine whether you should be registered. Issues to consider include:
• Are you providing motor vehicles owned by your business to employees? (even if you are a business owner
who is paid a salary)
• Are you providing meal benefits or entertainment? e.g. client lunches with employees attending
• Are you paying certain expenses as part of a salary packaging arrangement? e.g. health insurance, school
fees, etc
• Do you provide housing benefits for employees?
With the current FBT audit activity, even if you journal employee contributions at year end to reduce your FBT
liability to NIL, it is still recommended that you are registered and lodge a nil return each year.
Where to now & what are your options?
Where you are required to be registered for FBT the only way to reduce the likelihood of an ATO FBT audit is to
voluntarily register for FBT. There are two approaches to registration that you can take.
Option 1 – Detailed FBT Returns:
The first option is to register for FBT and prepare detailed FBT returns each year. Whilst this may be a time
consuming exercise, it is the most suitable approach for employers who are providing more than just motor vehicle
benefits such as meal entertainment, salary packaging, etc. We can assist in preparing your FBT Registration.
Option 2 – Employee Contributions to reduce FBT liability to NIL:
The second option is where you have only Motor Vehicle Fringe Benefits and you require employee contributions to
reduce the FBT liability to NIL. This is most common amongst family owned entities. Usually, a journal entry is
completed which avoids the employees (who are typically the owners) from having to make cash contributions to
the family owned entity. It is important to note that any employee contributions via journalised entries must be
undertaken in accordance with the Commissioners guidelines in MT 2050.
Where this option is taken, we recommend you still to register for FBT but lodge a non-lodgement notice where
your FBT liability is reduced to NIL by employee contributions. This way, you can demonstrate to the ATO that you
are aware of the need to be registered for FBT and that you are reviewing your obligations on a yearly basis. We
can prepare the necessary paperwork and journals at the time of preparing the Company’s financial accounts for
income tax purposes.
FBT is a complex area with many different requirements. We can help your business remain compliant.
More Information
Should you have any queries or want to have a general discussion about FBT or any other matter, please do not
hesitate to contact either Alex Vrahos or myself on 03 9886 0800
Tony Rule, CA
Partner
Business Advisory & Tax
tonyr@tagfinancial.com.au
Disclaimer: The information contained in this document is general in nature only. Professional advice should be sought before acting on
any aspect of this document. Liability limited by a scheme approved under Professional Standards Legislation.
© Copyright TAG Financial Services (Feb 2012)
TAG Financial Services Pty Ltd
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