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FBT overhaul ‘not a priority’ for government

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FBT overhaul ‘not a priority’ for government

The government will be unlikely to abandon fringe benefits tax despite its high compliance cost to revenue intake ratio in the absence of holistic tax reform, says one professional association.

Tax&Compliance Jotham Lian 20 March 2019
— 1 minute read

The Institute of Public Accountants general manager of technical policy, Tony Greco, said that while the compliance costs of FBT were almost five times higher than other taxes, it would be very unlikely for the government to let go of the revenue stream.

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“The government is not going to give up that revenue stream even if it’s 1 per cent; it is an important 1 per cent and in this environment, asking a government to forego a revenue stream is not possible,” Mr Greco said.

“The government doesn’t wear the administrative cost and its easy for them to do nothing, but employers wear that and its a hidden cost from a government perspective.

“The best you can hope for is to take a lot of the nuisances out of the FBT regime.”

The Board of Taxation is currently reviewing the compliance costs of FBT, releasing some early results which show that tax agents and employers disagree over whether their business practices lower or increase the cost of meeting their FBT obligation.

Mr Greco believes that while it may be too difficult to call for a major overhaul of the FBT regime, some “short-term wins” can be achieved if the board’s review calls for the removal of some administrative headaches.

“There are some quick wins, it is document hungry, going to the source to ascertain the proper FBT treatment — thats what sucks up the time,” Mr Greco said.

“A lot of accounting systems capture data and thats enough, but when it comes to FBT, you got to get down to the granular level and look and bills, who went where, whether it was on premises or off; you dont capture that data in the accounting system so thats where you got to get your head around what youre capturing versus what the FBT act requires the practitioner to do.

“It gets quite complex when you fully understand the nuisances around the FBT law. It just bogs you down in detail, and from an employers perspective, they probably dont quite get what you need to capture and thats the nature of the beast that drives everyone mad.

“We all know it is a tax the government still wants to collect, but if you dont have to jump through so many hoops to get there, I think everyone will see that as a short-term win, and then when you have holistic tax reform, thats when you can bring out the big guns and look at it long term.”

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FBT overhaul ‘not a priority’ for government
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Jotham Lian

Jotham Lian

Jotham Lian is the news editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.

With a focus on breaking news and exclusive analysis, Jotham keeps Accountants Daily readers up to date with company moves, tax updates and essential business and client strategy. 

Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.

You can email Jotham at: This email address is being protected from spambots. You need JavaScript enabled to view it. 

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