Why You Should Lodge An Fbt Return In 2021

HomeInsights

Why You Should Lodge an FBT Return in 2021

Even though Fringe Benefits Tax (FBT) is designed to capture benefits enjoyed by an employee, it is levied on the employer. Unless your employment agreement allows for any FBT that becomes payable to be recouped from the employee, the employer will have no recourse for reimbursement.

So, why should an employer lodge an FBT return where no FBT is payable? Well, for the simple reason that it turns on a three-year deadline for the ATO to commence audit activities.

Without an FBT return being lodged, the ATO has the discretion to launch an audit into activities as far back as a business has had employees. Without the evidence (e.g. signed declarations, logbooks, meal entertainment records, etc.) that FBT was NOT payable in each year the ATO is likely to raise FBT liabilities, even where the employee who enjoyed the benefit no longer works for the business. Thereby making it impossible for the business to recoup anything.

Where an employer believes they have done everything in accordance with legislation, people will make mistakes. A common mistake occurs where an employee is provided with a car and the private use is worked out using the operating cost (logbook) method. A part of using the logbook method is working out deemed depreciation each year and many accountants overlook this or work it out incorrectly by relying on the depreciation claimed on the business’ financial statements. This mistake can give rise to an FBT liability where the calculated employee contribution is insufficient to remove the car’s taxable value.

If a mistake like this is identified the ATO is likely to review the entire period that the car was owned by the business. Lodging an FBT return would limit the length of time the ATO can audit to three years.

Lodging an FBT return would limit the length of time the ATO can audit to just three years.


Another common mistake is not maintaining a register of which employees are the recipient of meal entertainment benefits.
Not all meal entertainment benefits are treated the same which is why maintaining a register is vital.

Questions?

The ATO has signalled that there will be an increased focus on FBT this year so if you would like to limit the ATO’s ability to retrospectively launch an audit please contact your advisor on (03) 5911 7000 or email us for assistance.


22 Mar

Why You Should Lodge an FBT Return in 2021

Why should you lodge an FBT return where no FBT is payable? Well, for the simple reason that it turns on a three-year deadline for the ATO to commence audit activities. This is a NEW ATO rule as a result of massive deficits due to COVID. The ATO need to gain more funds somehow...FBT liability is one of the methods.


READ MORE READ MORE
22 Mar

What is a Car Fringe Benefit?

A car fringe benefit commonly arises when an employer makes a car they own or lease available for the private use of an employee.


READ MORE READ MORE
22 Mar

Entertaining, Meals and FBT

An everyday occurrence across the business landscape in Australia is the practice of taking both existing and potential clients out for a meal to cement the business relationship, with the cost of this meal often covered by one party.


READ MORE READ MORE
22 Mar

How The ATO Identifies Potential FBT Employers

The ATO has signalled that there will be an increased focus on FBT this year. Given the ever-improving tools at the ATO’s disposal, in conjunction with the government’s need to raise additional revenues, it is important that employers ensure they remain compliant with their FBT requirements.


READ MORE READ MORE
22 Mar

Providing Cars to Employees - Tips & Traps

Granting employees’ access to company cars is treated by the ATO as a ‘non-cash benefit’, more commonly referred to as a fringe benefit.


READ MORE READ MORE
15 Feb

Fringe Benefits Tax - All the need-to-knows

On 31 March 2020, the Fringe Benefits Tax (FBT) year ends. With the ever increasing budget deficits, the ATO will be reviewing whether all employers who should be paying FBT are, and that they are paying the right amount. Who needs to lodge a FBT return? Find out here.


READ MORE READ MORE


Related News

26 Jul

Using Your Super To Buy Property

ONLINE Webinar Session
27 July // 1:00PM


READ MORE READ MORE
21 Jul

Top 25 Mental Health Tips During Lockdown

Taking care of your mental health during lockdown periods becomes really essential. Shared by Simon Fraser University Health & Counselling Services: 25 tips to help you and your loved ones navigate this time.


READ MORE READ MORE
21 Jul

Top Tax Tips For Property Investors

Now that the new financial year is here, it’s time to start looking at all the ways you can make the most of your investment property. If you want to claim your expenses on your rental property, it’s vital that you have good records.


READ MORE READ MORE