FBT Solutions

02 8079 2924

ATO Data Matching



Cars in transition and under attention

Cars usually represent the biggest risk area for employers. With a continuing and elevated level of attention from the ATO, management of cars from a FBT perspective must always be a priority.

Car reform & transition

Whilst the car reforms commenced back on 10 May 2011, we mustn’t lose sight of the transitional rules and these will require continued monitoring through until 1 April 2014 when the flat rate of 20% applies. Therefore, only two FBT return periods (2013 & 2014) remain where employers (and employees) will need to worry about such things as odometer readings and annualising of kilometres when valuing the car benefit using the statutory formula method (SFM).

Cars provided prior to 10 May 2011, or where a pre-existing commitment was in place to prior to that date, will continue to use the old statutory fractions unless there has been a change in commitment. Changes made after 10 May 2011 to commitments existing prior to 10 May 2011, such as re-financing a car, altering the duration of an existing contract or changing employers, are new commitments and will therefore be subject to the new arrangements. Under the transitional rules, if the amendments (new commitments) do not apply at the start of an FBT year (or from the time the car was first held if that happens after the beginning of the FBT year), the amendments will instead begin to apply from the start of the next FBT year as follows:

 

Thresholds

 

Old   rates

New   rates after 10 May 2011

 

2012

2012

2013

2014

2015

0 – 15,000 kms

26%

20%

20%

20%

20%

15,000 – 25,000 kms

20%

20%

20%

20%

20%

25,000 – 40,000 kms

11%

14%

17%

20%

20%

More than 40,000 kms

7%

10%

13%

17%

20%

Therefore, the key point is that whilst a car may be subject to the new rates, the application of the new rate may not occur until the first day of the next FBT year. This requires the 2013 FBT return preparers to flag these changes for the 2014 FBT return. And hopefully, this requirement has been flagged by the 2012 FBT return preparer for the 2013 FBT return. Use of annual rotation of the FBT return preparer can often lead to confusion.

When preparing your 2013 FBT return, the choice of rates will depend upon whether the old grandfathered rates continue to apply as a pre 10 May 2011 contract or if the car is included in the new transitional rates. The table below illustrates:

Thresholds

Grandfathered Rates

Transitional Rates

0 – 15,000 kms

26%

20%

15,000 – 25,000 kms

20%

20%

25,000 – 40,000 kms

11%

17%

More than 40,000 kms

7%

13%

ATO focus

Cars are the single largest FBT revenue item for the Government (although LAFHA may well challenge for the title in 2013!). As mentioned, cars remain a major ATO focus. The ATO are targeting cars on a number of fronts….

Luxury cars and use of logbook

The ATO have focussed closely on the use of log books in general but particularly in respect of luxury vehicles, especially high end luxury sports cars.

Exempt cars

The ATO have undertaken a campaign targeting employers who have claimed exemption for vehicles and are not lodging FBT returns. There exists a general lack of understanding on the application of car exemptions and often this is due initially to lack of clear policy and then poor compliance procedures. It is an area that requires careful management as cars are highly visible benefits and their related costs run clearly through the financials.

Employee contributions project

ATO analysis has identified that a high percentage of employers who report employee contributions in their FBT returns with the effect of reducing the taxable value of benefits, are failing to report those employee contributions as assessable amounts in their income tax returns and related GST liabilities in the periodic BAS.

The ATO has been issuing letters to employers where the ATO has identified discrepancies between Income Tax Returns and FBT Returns. The ATO are reminding employers of their responsibilities with contributions and that they must be reported as income in the correct label on the income tax return. If the employer has not reported the income then an amended return will be necessary.


With the 2013 FBT Returns due for lodgement and payment on 21 May 2013, let us help you.

We can assist you with preparing or reviewing your 2013 FBT return, and organise a deferred FBT lodgement extension. Contact us at info@fbtsolutions.com.au or call us on 02 8079 2924.

ATO focus

Cars are the single largest FBT revenue item for the Government (although LAFHA may well challenge for the title in 2013!). As mentioned, cars remain a major ATO focus. The ATO are targeting cars on a number of fronts….

Luxury cars and use of logbook

The ATO have focussed closely on the use of log books in general but particularly in respect of luxury vehicles, especially high end luxury sports cars.

Exempt cars

The ATO have undertaken a campaign targeting employers who have claimed exemption for vehicles and are not lodging FBT returns. There exists a general lack of understanding on the application of car exemptions and often this is due initially to lack of clear policy and then poor compliance procedures. It is an area that requires careful management as cars are highly visible benefits and their related costs run clearly through the financials.

Employee contributions project

ATO analysis has identified that a high percentage of employers who report employee contributions in their FBT returns with the effect of reducing the taxable value of benefits, are failing to report those employee contributions as assessable amounts in their income tax returns and related GST liabilities in the periodic BAS.

The ATO has been issuing letters to employers where the ATO has identified discrepancies between Income Tax Returns and FBT Returns. The ATO are reminding employers of their responsibilities with contributions and that they must be reported as income in the correct label on the income tax return. If the employer has not reported the income then an amended return will be necessary.

 Next Steps

Firstly, in relation to the FBT returns, if you have LAFH arrangements in place, a request to the ATO for an extension of time to lodge is probably a wise move. Ordinarily FBT return extensions are common place, and there has certainly been much discussion with the ATO about extending the lodgement date on a permanent basis – 51 days to identify, value and calculate a year’s worth of FBT is a tough ask.

Secondly, cars & LAFHA represent significant FBT challenges. These challenges are often exacerbated by the lack of policy, procedure and records in place. Therefore, post lodgement of the 2013 FBT return, it is highly recommended that employers consider a thorough review of their obligations. With contractor reporting, increased payslip disclosure and greater focus by the ATO and the Office of State Revenues, amongst other things, an employer obligations review is timely.

Good luck, and remember, if it all looks too hard – outsourcing may be the FBT solution for you!

 


ATO FBT motor vehicle data matching

How we collect the data

We obtain data from the state and territory motor vehicle registering bodies. This data is matched against taxpayer records to identify those participating in the cash economy, and who may not be declaring all their income or deliberately avoiding their tax obligations.

The motor vehicle data-matching program identifies all motor vehicles sold, transferred or newly registered in the 2011-12 and 2012-13 financial year where the transfer and/or market value is $10,000 or greater.

We have obtained data from the following state and territory motor vehicle registering bodies:

State/territory Government representative
New South Wales Roads and Maritime Services, NSW
Queensland Queensland Department of Transport and Main Roads
Victoria VicRoads Licensing and Registrations Operations
Tasmania Tasmania Department of Infrastructure, Energy and Resources, Registration and Licensing Branch
South Australia South Australia Department for Transport, Energy and Infrastructure
Western Australia Department for  Transport
Northern Territory Department of Lands and Planning
Australian Capital Territory ACT Road Department of Urban Services, Road User Services

How we use the data

We use motor vehicle data to improve compliance with tax obligations of taxpayers by:

  • identifying taxpayers whose expenditure is in excess of their reported income
  • identifying businesses that sell vehicles and do not report, or under-report those sales
  • obtaining intelligence to increase our understanding of the behaviours and compliance profile of buyers and sellers
  • developing and implementing strategies to improve voluntary compliance, including educational or audit activities as appropriate
  • helping to address potential non-compliance in the following areas
    • income tax
    • superannuation
    • goods and services tax
    • fringe benefits tax
    • luxury car tax.

Those identified as being at risk of potentially skimming some or all of their cash takings, running part of their business ‘off-the-books’, or in other ways not reporting all their income, should contact us to make a voluntary disclosure of any under-reported amounts.

In cases where individuals or businesses fail to comply with their obligations – even after being reminded of them – other action may be appropriate, including consideration for default assessments of tax liabilities.

Data-matching projects help protect honest taxpayers by deterring, detecting and dealing with those who have not complied.

http://www.ato.gov.au/content/00193907.htm


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