30 March 2024

FBT compliance work proves costly for employers
13 December 2009

A recent case at the Administrative
Appeals Tribunal (AAT) meant an
employer had to pay $87,739 plus
penalties and interest.
The case involved a company employer and employee
director. The employer did not lodge a fringe benefits tax
(FBT) return for a number of years. An audit of the company
discovered a car fringe benefit liability.
The employer was not aware that:
■ cars garaged near an employee’s home are available for
the employee’s private use
■ a logbook year commonly occurs when you use the
operating cost method for the first time.
If a car is garaged at or near an employee’s home, the
FBT law says it is available for the employee’s private use,
regardless of whether the employee has permission to use
the car privately.
It is very important to keep accurate and up-to-date log books.
The ATO is continuing to check car benefits through data
matching and compliance verification.
When they review employers’ practices, the average liability
per case is around $77,000 with an associated general
interest charge of over $19,000.
When they escalate cases and issue assessments, additional
penalties average over $38,000 per case.
What this means for you
If you don’t meet their FBT obligations, you may
receive a default assessment and associated penalties.
Lodging an FBT return late is better than getting caught not
correctly accounting for FBT.
If you voluntarily disclose an FBT mistake before the ATO
contacts you, you minimise penalties, although the general
interest charge (GIC) will normally apply.

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