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FBT red flags marked by ATO for 2019 lodgement

The ATO has listed six items relating to fringe benefits tax that will attract its attention this year, with tax practitioners urged to remind clients of their obligations.

Tax&Compliance Reporter 09 April 2019
— 1 minute read

Car fringe benefits will be a top item that will attract the Tax Office’s attention this year, with the agency warning against failing to report benefits, incorrectly applying exemption for vehicles or incorrectly claiming reductions for these benefits.

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Just last year, the ATO issued PCG 2018/3, explaining when the commissioner will not apply compliance resources to determine if private use of the vehicle was limited for the purposes of the car-related exemptions.

The ATO will also pay special attention to mismatches between the amount reported as an employee contribution on an FBT return compared to the income amounts on an employer’s tax return.

Clients claiming entertainment expenses as a deduction but not correctly reporting them as a fringe benefit, or incorrectly classifying entertainment expenses as sponsorship or advertising, will also be likely to hear from the Tax Office.

The Tax Office will also pay special attention to the calculation of car parking fringe benefits when red flags surface, such as significantly discounted market valuations, using non-commercial parking rates and not having adequate evidence to support the calculated rates.

Clients who do not apply FBT to the personal use of business assets provided for the personal enjoyment of employees or associates will also attract the ATO’s attention.

Needless to say, clients who do not lodge an FBT return or lodge them late to avoid or delay the payment of tax should expect scrutiny from the Tax Office.

Registered tax agents who have added clients to their FBT client list by 21 May 2019 are required to lodge 2019 FBT returns by 5 June 2019 through the practitioner lodgement service, with payment due by 28 May 2019. Lodgement and payment will be due by 21 May if agents lodge a paper return.

FBT red flags marked by ATO for 2019 lodgement
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