Built by FBT Practitioners for FBT Return Preparers
Our FBT Manager Software Tool is new for 2024 and currently being developed for delivery in early 2024. The Tool is a FBT Return preparation software that has a strong focus on ensuring that the correct records have been maintained and confirming the basis for reductions in taxable value (Exemption, concession, reduction, contributions etc). The Tool is being developed based on my 25 plus years of hands on FBT experience – understanding business needs and also the current ATO requirements and key risk areas.
If there was any doubt that Motor Vehicles is the biggest issue, the ATO have confirmed their concerns and provide examples where based on ATO data and risk models, they will select an employer for a FBT car review to check if the company is meeting its FBT obligations.
We see a significant level of non-compliance in situations where an employer provides a motor vehicle to an employee (or their associate) for their private travel or makes it available to use privately.
Situations that concern us include when employers:
- treat cars as 100% business use, even though they are used or available for private purposes
- don’t have a valid log book, or the log book is not a representative sample of actual travel
- treat all eligible commercial vehicles as FBT exempt, without considering if the private use of the vehicle was limited.
ATO Example One: identifying private use
Eve is the owner and sole director of a company, Eve’s Consultancy Business Pty Ltd (ECB). Eve arranges for ECB to purchase a car, which she uses to visit clients and for other work-related travel.
Eve considers the car to be a business car because it is owned by the company and has a sign on the side with the business name. Therefore, ECB does not keep a log book and does not lodge an FBT return.
Based on our data and risk models, we select ECB for an FBT car review to check if the company is meeting its FBT obligations.
During the review, Eve explains that the car is garaged at her home and she uses it for her daily commute to the office.
We advise Eve that:
- home to work travel is private use
- when a car is garaged at an employee’s home (as a director of ECB, Eve is considered an employee for FBT purposes), the car is considered to be available for their private use
- in both instances a car fringe benefit has been provided and FBT applies.
We provide Eve with information about how to calculate FBT using the statutory formula method (she can’t use the operating cost method because there is no log book). She agrees to lodge an FBT return for ECB.
ATO Example Two: limited private use of eligible vehicles
BTE is an engineering business. It has a fleet of dual cab utes (with a carrying capacity of less than 1 tonne) and sedans, which its employees use to attend business sites and visit clients.
BTE considers that FBT doesn’t apply to the vehicles because the utes are eligible commercial vehicles and the sedans are only used for business purposes. Therefore, BTE does not lodge an FBT return.
Based on our data and risk models, we select BTE for an FBT car review to check if the business is meeting its FBT obligations.
The review identifies that the sedans remain at the office and the utes are taken home by employees and used for private purposes (such as weekend sport and camping trips).
We advise BTE that the private use of the utes must be limited to be an exempt benefit (see PCG 2018/3 Exempt car benefits and exempt residual benefits: compliance approach to determining private use of vehicles). The utes were used for extensive private purposes therefore these conditions have not been met. In this situation a car fringe benefit has been provided and FBT applies.
We provide BTE with information about how to calculate FBT. The business lodges an FBT return.
- The distinction between entertainment and sustenance, and application of exemptions such as the minor benefit exemption are the most common issues encountered with respect to entertainment
- Many employers are uncertain as to what is considered to be infrequent and irregular, and what is a reasonable total value of associated benefits, incurring high cost of compliance
- The ATO acknowledge the above concerns and recognise there are challenges
These are key areas in FBT Compliance and will be discussed in our 2023 FBT Workshops: https://fbtsolutions.com.au/fbt-return-preparation-full-day-workshops/
To help you get ready for FBT 2023 we are running 8 full day Face to Face FBT Workshops and 2 full day Online Workshops across the country in February and March 2023. Here is the full list of locations and dates:
ONLINE: Tuesday 21 February 2023
Sydney: Wednesday 1 March 2023, Hilton Hotel – 488 George Street
Parramatta: Friday 3 March 2023, Novotel – 350 Church Street
Canberra: Thursday 9 March 2023, Novotel – 65 Northbourne Ave
Brisbane: Tuesday 14 March 2023, Hilton Hotel – 190 Elizabeth Street
Melbourne: Thursday 16 March 2023 Marriott Hotel – Corner Exhibition &, Lonsdale Streets
Perth: Tuesday 21 March 2023, Parmelia Hilton Hotel – 14 Mill Street
Adelaide: Thursday 23 March 2023, Hilton Hotel – 233 Victoria Square
Sydney: Tuesday 28 March 2023, Hilton Hotel – 488 George Street
ONLINE: Thursday 30 March 2023