The ATO is reminding employers of changes that could affect their Fringe Benefits Tax (FBT) obligations this year. With an increase in audits, it is crucial you are aware of common FBT mistakes and how to avoid them.

ATO confirms audit push on lifestyle assets

A recent update from the ATO highlights the FBT risk for employers who provide lifestyle assets for the private use of employees. ‘Lifestyle assets’ refer to high-value assets typically used for personal enjoyment and recreational purposes rather than business related activities.
The ATO has stated they have updated their data-matching capabilities and will be closely monitoring the below:

• Caravans and motor homes valued at $65,000 or more
• Motor vehicles (including cars, trucks, motorcycles) valued over $65,000
• Thoroughbred horses valued at $65,000 or more
• Fine art and marine vessels valued at $100,000 or more

From an FBT perspective, it is advised employers who provide lifestyle assets in these categories should take additional care to ensure compliance with their FBT obligations. Failure to comply may result in increased audit risk, FBT adjustments and potential penalties.

Record-keeping changes + key vehicle exemption rules

Employers can now use existing records instead of travel diaries and declarations for some fringe benefits. However, they must meet the required information standards when lodging their FBT returns. 

Furthermore, the FBT exemption for plug-in hybrid electric vehicles (PHEVs) will end on 31 March 2025. Employers can continue to claim the exemption only if the vehicle was used or available before 1 April 2025, with a binding agreement to keep providing private use after that date. 

ATO’s director of FBT risk and governance, Jennifer Madigan, shared common errors employers make, especially with motor vehicles.  

Misclassifying vehicles or treating private use as business use can cause problems. For example, trips like commuting, lunch runs, or school pick-ups are generally considered private use and attract FBT.

How can I avoid errors?

To avoid errors, employers are urged to follow four key steps: 

• Identify benefits: understand the type of benefits provided and their specific record-keeping requirements
• Calculate taxable value: use the appropriate valuation method
• Lodge and pay: submit your FBT return and make payments by the due date
• Keep accurate records: ensure all necessary records are properly maintained and retained 

Don’t wait until it’s too late

Getting it right from the start helps employers avoid costly errors and higher FBT liabilities. If you’re concerned about your compliance or have more questions about Fringe Benefits Tax, our team is here to help.

Book an appointment today to ensure you’re aware of common FBT traps and compliance obligations. Contact us today to book a free, no-obligation consultation, and let’s explore how we can help protect you and your business from increasing audits.

The ATO have stated with an increase of data-matching, this will directly equate to a more audits across the board. Read our article here detailing the focus areas of audits and what you can do to protect yourself and your business.

Sources:
ATO delivers FBT reminder as deadline looms
ATO flags top target areas for FBT