Misreporting FBT on personal use of work vehicles

ATO is focusing on employers who don’t meet their FBT obligations when providing work vehicles for private use.

Providing private use of a work vehicle is one of the most common fringe benefits offered by employers.

If you make a vehicle available to your employees (or their family members or associates) for private use, it may be subject to fringe benefits tax (FBT). This means you may need to lodge an FBT return and pay FBT.

Failing to report, or incorrectly reporting, fringe benefits undermines fairness for employers and can create compliance issues for employees. Doing it right ensures a level playing field and helps your employees meet their tax obligations.

Employers who overlook their FBT obligations may:

• fail to lodge an FBT return when required
• Assume private use of a dual-cab ute is automatically exempt
• incorrectly claim vehicle exemptions
• avoid apportioning private and business use
• don’t keep adequate records, such as valid logbooks.

These practices can lead to audits, penalties, and interest charges, as well as reputational damage.

If you provide a work vehicle that employees can use for private purposes, you need to check whether it’s a fringe benefit and ensure it’s reported correctly.

ATO uses sophisticated data and analytics to identify businesses that aren’t meeting their obligations. ATO compliance teams are actively contacting employers who fail to comply or deliberately avoid FBT.

Don’t risk penalties or reputational damage – stay on top of your FBT obligations and keep accurate records.

For more information, visit the ATO focus areas for small business.

For tailored advice about your tax and super needs, speak to RA Advisory’s registered tax practitioner.

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Source: ATO