Author: Tanya Titman, Managing Director Date Posted: 18 February 2016
For years I have been warning clients of the risks associated with ignoring Fringe Benefits Tax (FBT). “Burying your head in the sand” is not a smart strategy. FBT is one of our most unpopular taxes and one business owners tend to ignore - despite warning
For years I have been warning clients of the risks associated with ignoring Fringe Benefits Tax (FBT). “Burying your head in the sand” is not a smart strategy. 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.
I have been predicting the ATO will start aggressive audit activity for years. It seems the day has arrived. The ATO is stepping up the number of audits in this area. They are also quite upfront about the extensive nature of these audits.
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.
Every year, we provide clients with a questionnaire, listing what information is required for the preparation of an FBT return. In our experience, most businesses provide FBT to some extent, however we operate in a self-assessment environment. If you do not provide us with the correct information, we cannot 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 our tax team to manage your position and minimise it as much as possible.
The FBT year ends on 31 March each year so don’t leave it to the last minute. Get in contact with us now to work out what you need to do to be compliant and to manage your tax position.
If you have not lodged an FBT return, 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..
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