10 FBT Tips You Can’t
Ignore
The 2011 Fringe Benefit Tax
(FBT) year ended on 31 March.
With FBT returns generally due to
be lodged on 21 May 2011, here
are 10 FBT Tips you can’t ignore.
April 2011
1. Check Last Year’s FBT
Return
4. Beware Changes to
Other Taxes
The good news is that there have
been no significant legislative
changes to FBT over the past year,
so it’s fine to use your 2010 FBT
return as a guide. But remember:
you still need to be mindful of court
and Australian Taxation Office (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. For instance, if your
company tax return includes a
claim for car expenses at Item 6
Label Y, your FBT return must also
show the business’ car-related
fringe benefits. And if there is a
difference between Item 6 Label I in
your company tax return for fringe
benefit employee contributions and
Item 22(b) in your 2010 FBT return,
you are likely to receive a prompt
‘please explain’ letter from the ATO.
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. Be aware,
however, that if you choose not
to lodge, you may need to have
evidence to support your ‘nil’ FBT
payable position in the event of an
ATO audit.
Under changes to income tax
rules, company assets used by
employees who are shareholders
or associates of shareholders can
be deemed dividends. It is critically
important not to fall foul of these
provisions as they often result in
a big tax bill for the employee/
shareholder.
5. Check Car Receipts
Many employees who salary
sacrifice cars make after-tax
contributions in order 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.
Understandably, people can’t
resist nibblies such as chocolate
and crisps when filling up, but it is
important to reverse these amounts
as they do not count as employee
contributions.
6. Cost of a Car
The ATO has finally released its
long awaited Draft Ruling on how
certain arrangements affect the
‘cost’ of a car. The Draft deals with
issues such as employee trade-ins
and fleet discounts. It is essential
reading for employers that provide
car benefits.
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10 FBT Tips You Can’t Ignore
For Further Information
7. Car Odometer Readings
9. GST
For more information please contact
your local Crowe Horwath advisor.
Steve Di Leo
Head of Tax Advisory Group, Sydney
Tel +61 2 9619 1637
steve.dileo@crowehorwath.com.au
Norman Elliot
Head of Tax Advisory Group, Melbourne
Tel +61 3 9258 6866
norman.elliott@crowehorwath.com.au
Peter Fallon
Head of Tax Advisory Group, Perth
Tel +61 8 9488 1102
peter.fallon@crowehorwath.com.au
Tony Marks
Head of Tax Advisory Group, Brisbane
Tel +61 7 3233 3593
tony.marks@crowehorwath.com.au
When using the kilometre method
for calculating the taxable value of
a car, it is very important to have
both opening and closing odometer
readings. You can substantiate
these readings with sales or repair
invoices, or charge card records.
However, where no information is
available, the ATO has indicated
it will impose the maximum 26%
statutory fraction in working out the
taxable value of the car.
8. Use of Utes
Many ‘tradie’ style businesses
believe they can provide an FBTfree 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. Be warned: the ATO
is notorious for selecting audits
based on the rego numbers of utes
parked at footy grounds.
If employees make after-tax
contributions in respect of their
car benefits, Goods and Services
Tax (GST) is payable and it must
be remitted to the ATO by their
employer. There is no GST payable
on unreimbursed petrol costs.
10.Living Away From Home
Allowances
The ATO has been undertaking
review activity in relation to
employers providing Living
Away From Home Allowances
to employees for some time. It is
important that employers are able
to demonstrate that employees are
actually living away from home, that
the work contract supports this
conclusion and that a copy of the
Living away from home declaration
is readily available. As a matter of
course, the ATO will ask employers
to justify the basis used to obtain
any exempt accommodation and
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