04:05
ISSUE 4
What is the current State of Play with FBT? Recently the Australian Taxation Office (ATO) have announced significant gaps in FBT revenue and FBT registrations. These are areas of concern and the ATO has highlighted the failure by employers (and their tax agents) to engage with the FBT requirements, including reporting the fringe benefits provided to employees in relation to motor vehicle benefits, namely private use of employer- provided motor vehicles. The ATO has specified key areas of concern where they see a significant level of non-compliance in situations where an employer provides a motor vehicle to an employee (or their associate) for their private travel or makes it available to use privately. Specific areas of ATO concern include when employers: treat cars as 100% business use, even though they are used or available for private purposes don’t have a valid log book or the log book is not a representative sample of actual travel treat all eligible commercial vehicles (Utes) as FBT exempt, without considering if the private use of the vehicle was limited. Many employers believe that a motor vehicle purchased or leased by the business is 100% business because it is a business vehicle. However, the FBT rules require records to prove the level of business use. Without records as proof, the motor vehicle is effectively a 100% private or personal non-cash fringe benefit.
What are the key interactions between Payroll and FBT, and what’s important? There are a number of key areas of interaction including: 1. Employees 2. Reportable Fringe Benefits 3. Salary Packaging including Employee Contributions 4. Living Away From Home Allowances Employees Whilst this may seem obvious, there are some practical challenges here, the main one being what I call the “name game”. Let’s say we have an employee on the Payroll called William Smith. However, in the business, he is known as Billy Smith – and is referred/recorded that way in expense claims. The employee has a novated lease, in the name of Bill K Smith, and health insurance provided in the name of Will K Smith. From an FBT perspective, this becomes a challenge in identifying and reporting fringe benefits when it seems like there are 3 or 4 different employees receiving different benefits – when in fact there is only one employee. A similar challenge exists with an employee who has adopted a local name. For example, Wun Tan may be known as Sally Tan, Sally Wun Tan or SW Tan. What is the solution? Having the Payroll ID number as a single unique identifier across the business.
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