Fringe Benefits Tax (FBT) is an essential component of Australia’s taxation framework, designed to ensure that are fairly taxed. While some employers may believe that avoiding lodging an FBT return helps them stay under the radar, there are actually significant benefits—and legal safeguards—in lodging an FBT return, even if no tax is ultimately payable.
- Statute of Limitations Protection
One of the most important reasons to lodge an FBT return is to start the amendment period clock. If an FBT return is not lodged, the Australian Taxation Office (ATO) can amend assessments indefinitely. However, once a return is lodged, the ATO generally only has three years to audit or amend the return (unless fraud or evasion is involved). This provides legal certainty and closure for the business.
- Avoiding Penalties and Interest
Failing to lodge an FBT return when one is required can result in:
- Failure to lodge (FTL) penalties
- General interest charges (GIC) on unpaid FBT liabilities
- Administrative penalties for false or misleading statements
By lodging an FBT return on time, businesses demonstrate compliance and are more likely to receive leniency from the ATO in case of any minor errors.
- Voluntary Disclosure Benefits
If an employer realises they have made an error or omission in their FBT obligations, lodging an FBT return (or an amended return) allows them to make a voluntary disclosure. This can significantly reduce penalties, with the ATO often offering partial or full penalty remission for proactive compliance.
- Better Risk Management
Lodging an FBT return—especially where there’s a possibility of FBT liability—shows that the business is maintaining proper tax governance. This can reduce the risk of being selected for an ATO review or audit. The ATO often focuses compliance resources on businesses that fail to lodge when expected.
- Accurate Record Keeping
Preparing and lodging an FBT return requires the business to keep and assess records of benefits provided, such as:
- Company cars used privately
- Entertainment expenses
- Housing and accommodation benefits
- Expense reimbursements
This process helps businesses maintain more accurate books and improve their overall financial and tax reporting.
Conclusion
Even if a business provides minimal or no fringe benefits, it may still be advantageous to lodge an FBT return as a precaution. The benefits include statute of limitation protections, reduced penalties for disclosure, improved risk management, and greater clarity in tax records.
Contact us today so we can assess you FBT obligations. Lodging an FBT return might seem like a small task, but it’s one that can yield significant long-term benefits.
Leave A Comment