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The ATO expects tax agents to engage their clients and, educate them on FBT requirements, and protect them from potential audits.
To give us all a better understanding, we were joined in a recent webinar by Paul Mather. With over 25 years FBT and Salary Packaging experience, Paul was the perfect person to help us with these FBT questions. Please note this content is for general information only. It is not intended as professional advice. If you would like further information or FBT training, contact Paul at FBT Solutions.
When is the FBT Return Due Date for 2024?
Tax Agent's need to lodge returns electronically – in this case, the due date is generally the 25th of June (you must be an FBT client of the tax agent by the 21st of May).
Electronic Returns need to be lodged by Tax Agents by the 25th June, as long as they are an FBT client by the 21st of May.
If somebody gets a benefit but isn't on the books as an employee, maybe they're an associate, does it qualify for FBT?
If they're not an employee, it doesn't fall into the FBT net.
When do you need to keep a motor vehicle logbook for the whole year rather than just 12 weeks?
Logbooks are required for at least 12 weeks – there is no requirement in the law to have an ongoing logbook.
Does the rolling 12 weeks for motor vehicle logbook have to be in the FBT year, from start to finish?
Yes, the logbook must be completed by the 31st of March. If it straddles two years, as long as it’s valid and meets all requirements, it is good for the next FBT year.
How can you limit the audit time on your clients’ FBT returns?
If you lodge an FBT return, even if it is a nil return, the ATO cannot audit more than three years. Without this, we’ve heard of cases where the ATO has gone back up to 12 years, so this is a great investment for your team and client.
If a nil FBT return is lodged, limiting to a three-year audit, can the ATO go back further than the three years if they find a mistake in the last three years?
It's unlikely that the Tax Office is going to look back any further than three years for a mistake. If it's just an error, that's the period that they're looking at, and that's the period where they'll look for the amendment to be.
But if there is deliberate fraud and evasion, the ATO can go back as far as they want. They can re-look at whatever they want. But it has to be absolutely deliberate fraud and evasion.
For reimbursements, can it be for the original amount owed (so FBT never comes in), or does it have to be the FBT taxable amount per prescribed methods?
A reimbursement should be for the actual amount of the expense.
What date should you post the journal entry for reimbursement?
The post should be effective prior to lodgement of the FBT return. A good date to use in the financial statements is the 31st of March because you record the GST on that date.
What are the penalties for getting FBT wrong?
It's up to 200% of a 47% tax, plus interest on non-deductible interest.
What are your responsibilities if you don’t think a client is being 100% honest about FBT information they are providing you?
If you’re not certain about something a client has provided you, double-check with them or ask them other questions about the benefit. If they swear what they’ve given you is accurate, then you’ve done all you can. This is where the client would bear responsibility.
A great way to streamline this is to have a checklist and queries process as part of the workpaper, so you can be certain this process is followed and to cover yourself.
Core by ChangeGPS has workpapers, including checklists, to help you facilitate this.
Some employers provide housing for staff in remote sites or interstate staff to stay for local work. For longer term, they charge rent. Does this fall under FBT?
You need to work out every situation based on the facts. Are they actually on business travel, or are they living away from home, or have they relocated to the housing permanently? It ultimately comes down to which of those scenarios it is.
Can we take up an employee contribution if they charge an EV at home? PCG 2024-2 sets out a 4.20 cent per kilometre rate that can be applied for calculating the electricity charge and cost of electric vehicles. Can this be deemed as an employee contribution because the electricity is paid for by the home?
If the EV is exempt, then we're not going to pay FBT. However, we still need to do an FBT calculation for the reportable, and that's where the contribution comes in. Because, when we calculate FBT, we always need to consider any unreimbursed expenses.
It's probably not going to be that significant. If the employee does 10 000 kilometres for the year, 4.20 cents at 10 000 kilometres, is $420, but it is going to reduce the reportable amount slightly.
A real estate franchisor purchased a motor home for his home office and travel to clients' meetings. Instead of staying in hotels, parks it at a campsite. Would this be considered a motor vehicle, and what would be the best way to keep a logbook, based on kilometres or time used for home office and travel away from home?
In this scenario, you would probably have to have a usage record because I would assume there would be some private use in relation to the motor home. And that private usage would have to be taxed at some sort of market valuation fee.
Do you need to report Reportable Fringe Benefits Amount (RFBA) for exempt vehicles over one tonne?
You need to report RBFAs for any RFBA over $2 000. The RFBA needs to be reported on STP, even with the nil tax return.
If a client who owns a restaurant travels from home to the shops to purchase ingredients, from the shops to the restaurant, and then restaurant to home at the end of the day, is any of this considered business travel under FBT rules?"
Firstly, you've got to go back to what sort of vehicle we're talking about, and then, we look at what valuation we use. So, if there's a sedan or station wagon vehicle, we are using the statutory formula method, so that's all based on days available for private use. So that wouldn't be affected in terms of stopping off to buy some things on the way to work.
If we're using the logbook method, which probably not be the case for that type of vehicle, but, if we were then there's an argument to say travelling from home to that shop is private, but then travelling from the shop to the restaurant is business.
So it all comes down to what type of vehicle and what valuation method we are using.