The Australian Tax Office (ATO) is reminding employers that they may have fringe benefits tax (FBT) obligations that they need to file for before the deadline which falls on 23 May 2022 for those lodging their own returns or lodging paper returns. The deadline for returns being lodged using registered tax professionals is 27 June 2022. The dates have been pushed forward slightly as the usual dates this year fall on a weekend.
Employers are advised to ensure that they have undertaken the necessary steps to fulfilling their FBT obligations including registering, reporting, lodging and paying the due taxes. This reminder has been prompted by the realisation that many businesses will have for the first time owe this obligation due to having provided employees with benefits related to the pandemic.
According to ATO Commissioner Michelle Allen, more employers provided fringe benefits to their employees due to the pandemic in the form of such assistance as paying for equipment employees would need to work from home and providing non-cash benefits as an incentive to getting Covid-19 vaccinations. She added that some employers had gone so far as to provide their employees with pets that would keep them company as they worked from home.
The ATO has defined a fringe benefit as those payments made to employees that are in a form different from normal payment of salaries and wages. Besides the fringe benefits mentioned above, this can also include granting an employee permission to use a work vehicle for personal reasons, paying for an employee’s gym membership and providing them with tickets to concerts or other events.
The ATO is tapping into third party data sources to establish this obligation and will be imposing penalties on those that file incorrect or late FBT returns. The tax authority is urging employers to comply with their obligations. It is also encouraging them to ensure they understand what can be claimed as a deduction for the cost of providing the fringe benefits and when they can claim GST credits for items provided as fringe benefits.
While not all businesses are required to lodge FBT returns, it can be risky to ignore this concern at a time when ATO is becoming more aggressive about tax debts. Even those not obligated to file may be required by the ATO to justify their decision not to lodge.
BDO Tax Partner, Tim Sandow, has noted that it is a tax most people only consider once a year and that they should refresh their memory on how it works and if there have been any changes to the rules. He acknowledged that the rules could be complicated compared to other taxations. The ATO has provided a helpful fringe benefits guide on their website for employers to review.
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