FBT Changes and ATO Focus - 2015!

Mar 29, 2015

FBT CHANGES AND ATO FOCUS - 2015!


Firstly a quick reminder to ensure that you have recorded your odometer reading for all motor vehicles held by you as at 31 March 2015.

Here's what you need to be aware of for the FBT year end approaching and the new FBT year about to start.

The most significant change is the temporary increase in the FBT rate from 47% to 49% from 1 April 2015.

The FBT gross up rates have also changed in line with rate changes and we have outlined this below:

FBT Year
2015
2016
2017
2018
 FBT Rate
 47% 49%
49%
47%
 Type 1 gross up rate
 2.0802  2.1463  2.1463  2.0802
 Type 2 gross up rate
 1.8868  1.9608  1.9608  1.8868

The increase in the FBT rate is as a result of the temporary Budget Repair Levy which was introduced as part of the 2014-15 Federal Budget. The temporary Budget Repair Levy is a debt tax payable at a rate of 2% on every dollar of a taxpayer's annual taxable income over $180,000. This has effectively brought the top marginal rate to 49% effective from 1 July 2014. The changes in the FBT rate is to ensure that high income earners cannot access the FBT regime to lower their taxable income.

What has the ATO's attention in 2015?

The ATO has recently revealed statistics that indicate that 80% of all FEB revenue is generated from five core fringe benefits. These core fringe benefits identified by the ATO are noted below:
  • Cars valued using the statutory formula method;
  • Cars valued using the operating cost method;
  • Expense payment fringe benefits;
  • Car parking benefits; and
  • Meal entertainment benefits.

As a result the ATO has communicated that they will focus audit resources on these key benefits because they potentially pose a greater risk to taxation revenue. In line with this we will be focusing our attention on these benefits to ensure that we manage and assist you with your compliance obligations in respect to these areas during our FBT review. In addition to the above the ATO has noted specific area of concern being for example employers using the 'otherwise deductible' rule to reduce the taxable value of fringe benefits without maintaining the required documents and elections.

With respect to car fringe benefits the ATO has announced that it will acquire certain motor vehicle information from state motor vehicle registry bodies for the financial years 2014, 2015 and 2016.

The ATO has indicated that they will use the data acquired to identify and review taxpayers who potentially may not have met their obligations with respect to Fringe Benefits, GST, Luxury Car Tax and Income Tax. Again this will be a focus for us this year in ensuring that we assist you in complying with your obligations and ensuring the appropriate documentation is held in respect to these benefits.

FBT Questionnaire

We will shortly be forwarding to you our standard FBT questionnaire which is designed to assist in identifying any exposure that you may have with respect to fringe benefits. We would appreciate your time in completing this questionnaire and returning to us.

If you have any questions whilst completing the questionnaire please contact us so that we may ensure we work with you through this process. The questionnaire is also designed to identify categories of exempt fringe benefits.

Please feel free to contact one of our advisors to discuss in greater details if you have any questions regarding fringe benefits and the potential impact to you and your business.