FBT year about to close, compliance blowtorch about to fire up

Practitioners should note that fringe benefits tax is firmly on the ATO’s radar screen this year. Over the past 18 months the ATO, through its FBT Taskforce, has launched several audits and reviews of employers in the SME sector. FBT year about to close, compliance blowtorch about to fire up

Its compliance focus in particular has centred on several sticking points. Practitioners intending to refresh their knowledge and scope on the FBT regime can most likely cover the compliance areas concerned by looking at (but not limited to) the following:

definitional scope of “fringe benefit”types and structure of key fringe benefitsspecific methods for quantifying taxable value for fringe benefitsaccess requirements and effect of FBT exemptionsstructuring and implementing effective salary packaging strategiesspecific methods for quantifying taxable value for fringe benefits.

There have been a few changes flagged for the FBT regime this year, which practitioners should keep in mind when completing FBT returns.

Areas to be aware of include the treatment of some electronic devices, meal entertainment for certain classes of taxpayers, vehicle rates, LAFHA food and drink amounts, car parking and non-remote housing values. See this article for further explanations of the above.

Danger post-lodgment

Although the changes may seem relatively innocuous in regard to the overall FBT regime, what is more of a concern for practitioners and their clients is the looming ramped-up ATO compliance activities that are expected to be applied.

Note also that from July 1, 2017, the way fringe benefits will be treated for the calculation of several tax offsets will change. The meaning of adjusted fringe benefits total has been modified so that the gross rather than the adjusted net value of reportable fringe benefits is used. Adjusted fringe benefits total is used to calculate a taxpayer’s entitlement for the low income superannuation tax offset, the seniors and pensioners tax offset, the net medical expenses tax offset and the dependent tax offsets.

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