ATO Fringe Benefits Tax (FBT)
Attack on Motor Vehicles
Where a motor vehicle owned or leased by the business is used by an employee for private purposes (including travelling between home and the workplace), then FBT is an issue that needs to be managed. The ATO is conducting a data matching program that is aimed at motor vehicles to try and capture benefits that are not currently being reported through the FBT system.
The background to this is…………… comes in
There's a rumour swirling from the Australian Taxation Office that its employees like to go to weekend footy – not to watch the game but the cars parking outside the ground.
Utes have soared in popularity in the past decade. In mid-2009 the Toyota Hilux went past the Holden Commodore to become the nation's best-selling vehicle and has been in the top-selling list ever since. Meanwhile, the Commodore has slipped to No. 15 and its rival, the Ford Falcon, which was fifth-best-selling car when Hilux claimed No. 1 spot, has disappeared from the list altogether and will cease production from October 2016.
Unlike regular cars, and this is where the taxman and the talk of their watchful eyes at the football comes in, utes are exempt from fringe benefit tax for minor private use, including travelling to and from work and irregular use such as dumping domestic rubbish at the tip. Combine that with utes becoming more SUV-like and there is more bang for buck from a taxation perspective, compared with a Falcon or Commodore, which will cease production from 2017.
But there's a catch. If a ute was found to be used for private use the Tax Office could charge fringe benefit tax and other penalties ( reducing income tax deductions ).
When the ATO goes to the footy at the weekend and checks the number plates of all the utes ( that look like work vehicles ) it is a giveaway that they are being used for private use, especially the utes with signwriting.
An ATO spokesman said the office was focusing on "unusually high work-related expense claims, including work travel across all industries and occupations" and was using a "much wider approach than in previous years". The ATO has commented that tax officers do not attend football matches for the purposes of compliance activity. "We use contemporary techniques using sophisticated analytics and data to scrutinise all claims," the ATO commented. The ATO's ability to identify and investigate claims that differ from the norm is increasing at a rapid rate due to improvements in technology and the use of data. Vehicle registration plate recognition is nearly here !! These new ATO methods have proved successful including cross-checking vehicles with VicRoads' registration data base. This will be rolled out across Australia.
As a matter of course into the not so distant future the ATO, once having identified a vehicle / utility registered in business name, will then they follow this up with checks on the business being registered for FBT, lodgement of FBT returns and if any vehicles were disclosed in that FBT return. Then they will come asking questions.
If this matter is of direct concern to your particular business situation please call us at your soonest convenience.
21 April 2016