The Australian Taxation Office continues to increase its focus on Fringe Benefits Tax (FBT) compliance, particularly for small and medium-sized businesses. Using enhanced data-matching and targeted reviews, the ATO is identifying businesses that may be providing employee benefits but are not lodging FBT returns or correctly reporting those benefits.
If your business provides any benefits to employees — vehicles, entertainment, allowances, or reimbursements — now is the time to review your position.
Key areas attracting ATO attention
- Company vehicles, including utes. Particularly where businesses claim exemptions for work vehicles but there is significant private use. The ATO cross-checks vehicle registration data, payroll information, and FBT lodgements.
- Employee contributions. The ATO is checking that after-tax contributions are correctly recorded and applied to reduce FBT liabilities.
- Logbooks and record keeping. Incomplete or outdated logbooks and declarations are a common issue during reviews.
- Living-away-from-home allowances (LAFHA). The ATO is checking eligibility and supporting documentation.
- Remote and hybrid work benefits. Employee benefits linked to remote or hybrid arrangements are under increased scrutiny.
- Entertainment benefits. Meals, functions, and hospitality costs remain a high-risk area.
Lodge an FBT return — even if liability is nil
Even if your business has no FBT liability, lodging an FBT return matters for a few key reasons.
It starts the amendment time limit. Once an FBT return is lodged, the ATO generally has four years to review or amend that return. If no return is lodged, the ATO may review those benefits at any time in the future — leaving your business exposed to tax, interest and penalties with no time limit.
It helps manage risk. Lodging confirms to the ATO that your business has reviewed any benefits provided during the FBT year and assessed whether there is a liability. This is a positive consideration when the ATO determines the compliance risk profile of a taxpayer.
It provides certainty. Many everyday business activities can unintentionally trigger FBT — company cars, entertainment expenses, or reimbursements of personal costs. Reviewing your transactions and preparing a return ensures these items are properly considered and documented.
What to do now
Given the increasing ATO focus on this area and the growing risk of audit, we recommend that all businesses providing any form of fringe benefit lodge an FBT return for the current year. Our business tax team can review your situation, identify any FBT exposure, and handle the lodgement process.
If you are unsure whether your business has FBT obligations, or if you have not lodged in prior years, our business advisory team can help you assess your position and put the right processes in place going forward. You can also review your overall tax position as part of a broader accounting and tax engagement.
Contact our office if you would like to discuss opting in to FBT return lodgement for your business.