31 March – The FBT Year End and a Reminder the Tax Office Is After You!!!
At Complete Business Strategies we are regularly asked about motor vehicles and the issue of Fringe Benefits Tax (FBT) so we thought we should provide some brief information to all of our clients on the topic.
Fringe Benefits Tax is a tax on benefits provided to employees (which includes Directors). The most common benefit we come across is for motor vehicles.
As a general guideline, you will probably have an FBT issue if you provide employees (including yourself) a motor vehicle and they take it home.
This is because travel between an employee's home and work is generally considered to be private travel. This means the vehicle CANNOT be used 100% of the time for business purposes.
The Australian Tax Office (ATO) also understands this and has some very simple and effective ways to police these liabilities. As a result of matching tax return data with motor vehicle registration information in 2012 the ATO identified some very large FBT obligations. In one case an employer found they needed to pay over $200,000 in FBT. As a result of this success the ATO is planning to send another 10,000 letters out in 2013 and indications are they expect the same type of success.
Oh and by the way, it is not unheard of for tax office investigators to visit boat ramps on weekends and note the details of sign written vehicles to compare to the businesses tax return information to make sure there is some private use and FBT included for that vehicle!!!
We want to ensure the ATO doesn't have you in their sights for 2013. Our team can ensure that your FBT obligation is complied with in full. We can often achieve this without you having to pay a cent in FBT. We don't want our clients to be the target of the pending Tax Office FBT letters so offer the following advice:
- Contact us immediately if you provide your employee's and associates of your employee's (including the directors) with any of the following benefits:
- Motor vehicles, or
- Sports tickets, corporate hospitality, travel, meals, or
- Housing, living away from home allowances, or
- Any other benefit in the way of a "perk".
- Consider taking out Audit insurance to cover the costs of an audit enquiry. A letter even when you are fully compliant will often cost you more to deal with than your annual premium so this insurance is very cost effective.
The FBT year runs from 1 April to 31 March. If you think you may have an FBT issue, or just want to make sure you don't then NOW is the time to ring us on 5439 1600.
CLICK HERE For more related information about FBT