Reduced Fringe Benefits Tax (FBT) record-keeping

Effective 1 April 2024, employers can rely on legislative instruments introduced by the ATO in respect of reduced FBT record-keeping obligations for FBT purposes.

Employers must consider declarations when preparing a fringe benefits tax (FBT) return, alongside maintaining additional records for substantiation purposes, such as logbooks and travel diaries. 

The process of obtaining and upkeeping this documentation poses a significant compliance burden to employers, involving tasks like identifying eligible employees, obtaining signatures, and preserving completed declarations before the FBT lodgement due date.  These declarations are typically required to substantiate positions such as business usage or living away from home, which affect the employer’s ability to reduce the FBT liability on the given benefit.  They can also be cumbersome and difficult to obtain, particularly where required at the end of the FBT season in an already tight deadline, or from a terminated employee.

In instances where declarations cannot be obtained (i.e., terminated, redundant or resigned employees), despite the corporate records or organizational policies supporting FBT concessions, such benefits cannot be applied due to the absence of the required employee declarations.   To alleviate this compliance burden, the Government introduced Treasury Laws Amendment (2022 Measures No. 4) Act 2023 (29 of 2023).  

This included measures aimed at allowing the Australian Taxation Office (ATO) the ability to introduce legislative instruments (LI) with an aim of streamlining FBT record-keeping while maintaining similar taxation outcomes at lower compliance costs. The ATO has now published LIs that allow employers to rely on alternative documentation beyond prescribed FBT legislation (i.e., employee declarations). We outline the impact of these LIs, introduced via 3 tranches, in the pdf below. 
 

FOR MORE INFORMATION

For more information on classifying workers as employees or contractor issues, please contact Rick Kimberley or Gina Nedeljkovic.