The end of the FBT year is fast approaching and the ATO has revealed certain areas of concern for employers.
Living-away-from-home allowance (LAFHA)
An allowance to compensate employees living away from home to work, employers are susceptible to claim reductions for ineligible employees, not obtaining the required declarations from employees, and claiming deductions for exemptions (such as invalid accommodation and food components).
Provided motor vehicles
Employers are reportedly not declaring the use of employer-provided motor vehicles on FBT returns, resulting in inconsistent exemption applications and additional compliance costs. A car benefit can be taxable even if the employee has not driven the car – it only has to be available for their private use.
The ATO has identified that employers are often not able to show the employee’s obligation to make an employee contribution. Without an agreement in place with the employee, employers are unable to offset an existing liability. It has also been reported that employers have been taking advantage of excess employee contributions from one fringe benefit type to offset an FBT obligation relating to another fringe benefit type.