With another Fringe Benefits Tax (FBT) year having closed on 31 March and some recent Federal Court decisions in regard to FBT cases, this area is front of mind and the ATO is increasing scrutiny.

The ATO’s increased compliance activity in relation to FBT obligations will include some common target areas such as motor vehicles (including dual-cab utes), entertainment (staff parties, gifts), minor benefits exemptions and benefits to business owners. 

The recent cases highlight that company Directors receiving non-cash benefits can be considered under the definition of employee for FBT purposes, with the definition of employees therefore not limited to common law employment relationships.

Should you be lodging an FBT return?

Registration for FBT does require an annual FBT return to be prepared and lodged; however, the lodgement will provide some important benefits, including;

• When lodging an FBT return, the ATO’s powers to review/audit are generally limited to three years from the date of lodgement; however, if an FBT return is not lodged, the review period is unlimited.
  (Note that if registered and the ATO deems tax avoidance, the review period will be six years, and unlimited if considered tax evasion.)
  
  
• The above three-year review period is applicable even if the FBT return has a Nil taxable value, for example, where employee contributions are made.

• Providing the opportunity to review risks and exposure on FBT liabilities separate from the income tax year, with the FBT year spanning 1 April to 31 March.

• Provide the FBT Reportable amounts for employees in time for the Single Touch Payroll finalisation and reporting. 

For those not registered but have some potential FBT exposure, it is the perfect time to review your affairs, and it is certainly not too late to register. If you have any questions on this and would like to discuss your affairs, please contact us.