With Fringe Benefits Tax (“FBT”) returns due for lodgement in May, the Australian Taxation Office (“ATO”) has highlighted common FBT errors that may attract further scrutiny.
Some of the focus areas highlighted by the ATO include car parking fringe benefits, living-away-from-home allowances (“LAFHA”) and the claiming of exemptions & rebates.
The following tax alert provides some detail on the above-highlighted area along with noting some important factors to consider.
Car Park Benefits
If you provide employees with car parking fringe benefits, the ATO has highlighted they will be reviewing valuation methods used to value car parking spaces and all day car parking fees at relevant commercial car parking stations. The car parking threshold for the 2018 FBT year is $8.66 per day, so if you are relying on a rate lower than the threshold you may wish to review your records.
The ATO has highlighted the following common errors may attract further review:
- Market valuations that are significantly less than fees charged within a 1km radius of the premises the car is parked on.
- The use of rates paid where the parking facility is not readily identifiable as a commercial parking station.
- Rates charged for monthly parking on properties that do not have any car park infrastructure.
- Insufficient evidence to support the rates used as the lowest fee charged for all day parking.
Living Away from Home Benefits
LAFH benefits may arise when an employer provides for food or accommodation expenses where an employee is required to live away from their usual place of residence for work.
The ATO has highlighted the following common errors made by employers who provide LAFH benefits which may attract further review:
- Claiming reductions for ineligible employees.
- Failing to obtain required declarations from employees.
- Claiming reductions for exempt accommodation and food components in invalid circumstances.
- Failing to substantiate expenses relating to accommodation, food and drink
If you are providing employees with LAFH benefits you may wish to review your records to ensure compliance with the legislation requirements.
Employer Exemptions & Rebates
The ATO has noted that they will focus on the incorrect claiming of employer exemptions and rebates.
An example of this is where an employee makes a contribution to an employer for the use of an FBT item, reducing the taxable value of the benefit.
The ATO uses data matching systems to make sure the employer has not failed to report these contributions as income on their tax returns or incorrectly overstate these amounts.
Motor Vehicle Data Matching
The ATO has announced it will be making use of the ‘motor vehicles registries data matching program’ to assess the taxation and FBT compliance of businesses.
The ATO will match the data provided in the state and territory motor vehicle registering authorities against the taxpayer's lodgements with the objective of identifying those who have may not be meeting their registration, reporting and lodgement obligations.
If you require further advice on FBT or the tax implications of benefits you are providing to employees, please contact your local RSM office.