ATO warns employers on emerging ‘FBT myths’
The Tax Office is targeting some common areas of confusion surfacing with fringe benefits tax, particularly around the personal use exemption.
The ATO has been increasing its activity and communication concerning fringe benefits tax (FBT) with several employers pushing the limits with the personal use exemption, according to ATO deputy commissioner, superannuation and employer obligations, Emma Rosenzweig.
Speaking in a recent KPMG podcast, Ms Rosenzweig said the tight labour market is prompting many employers to start offering fringe benefits to their employees who hadn’t previously done so.
“We’re seeing some employers offer fringe benefits for the first time as they think about how to attract different employees or how to retain good employees and they may not have thought about fringe benefits tax before,” said Ms Rosenzweig.
“So our current focus is on increasing general awareness but also busting some of the common myths that we’re being told about.”
Ms Rosenzweig said the ATO has been receiving calls about certain “outrageous claims” made in advertising in relation to FBT.
“One of the myths we’ve been looking to bust is around utes, dual cab utes in particular, because there’s been this idea that if you provide a ute to your employees for work and they take it home over the weekend, then that doesn’t attract FBT,” she said.
“[However], I’m here to tell you that there is no magic in a ute and the exemption for private use of a work vehicle for FBT is only where that private use is really limited. So if your employees are able to take the work car home on the weekend and they go camping or take their bikes to go on biking trails, then that is not limited to personal use and will start to attract FBT.”
Employers that have employees taking work vehicles and using them for private purposes should look at some of the ATO’s materials on what constitutes exempt car benefits and when that might start to veer into FBT territory, Ms Rosenzweig said.
With the Christmas period approaching, employers should also be thinking about how FBT may apply to end-of-year work celebrations, she added.
She also reminded employers and accountants that the final five draft legislative instruments that implement changes to fringe benefits tax record keeping were released by the ATO last month.
These changes follow a legislative change that gave the Commission the power to allow employers to rely on alternative records to finalise their FBT returns.
Once the Commissioner has finalised the legislative instruments that prescribe what the alternative records are, Ms Rosenzweig said employers will then have the choice to either use their existing corporate records in place of things like travel diaries or employee declarations for some benefits.
The measures will apply from the 2024–2025 FBT year, which commences on 1 April next year.
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