For 2019–20, the net fringe benefits tax (FBT) gap estimate was $991 million or 20.3%. In other words, those with an FBT liability paid almost 80% of the total theoretical tax payable.
The FBT system can be considered a component of the broader PAYG withholding income tax on salary and wages regime. When we view PAYG withholding and FBT together, the integrated gap is approximately 2.0%.
This means employers are voluntarily paying 98% of taxes related to their employees' remuneration.
This gap forms a part of our overall tax performance program. Find out more about tax gaps, including why and how we measure them, and a summary of the latest available tax gap data.
Table 1 shows the 2019–20 net gap is consistent with the prior 3 years. It tells us there was no significant change in overall FBT compliance.
|
Element |
2014–15 |
2015–16 |
2016–17 |
2017–18 |
2018–19 |
2019–20 |
|---|---|---|---|---|---|---|
|
Population |
832,912 |
825,229 |
848,207 |
851,560 |
853,406 |
891,915 |
|
Net revenue effect gross gap ($m) |
1,537 |
1,744 |
1,144 |
1,120 |
1,122 |
1,016 |
|
Amendments ($m) |
19 |
25 |
30 |
29 |
25 |
25 |
|
Net revenue effect net gap ($m) |
1,518 |
1,719 |
1,113 |
1,091 |
1,097 |
991 |
|
Tax paid ($m) |
4,163 |
4,332 |
4,159 |
3,854 |
3,898 |
3,894 |
|
Theoretical liability ($m) |
5,681 |
6,051 |
5,272 |
4,945 |
4,996 |
4,885 |
|
Net revenue gross gap (%) |
27.1 |
28.8 |
21.7 |
22.7 |
22.5 |
20.8 |
|
Net revenue net gap (%) |
26.7 |
28.4 |
21.1 |
22.1 |
22.0 |
20.3 |
Figure 1 displays the trend in the gross and net income tax gap over the same period as a percentage.
Figure 1: FBT net revenue effect gap summary diagram 2014–15 to 2019–20 (percentage)
What's driving the gap
The primary driver is employers not participating in the FBT system when they provide benefits to employees. Contact between tax agents and their clients for FBT matters is often ad hoc. This contrasts with the strong focus and regular contact on income tax and GST. Some employers may not want to engage a tax agent to undertake FBT work because they do not want the additional cost.
Around a third of FBT adjustments result from a lack of awareness by either the employer or the tax agent. There are issues in understanding:
- FBT law
- rules of valuing, calculating, reporting and paying FBT on benefits provided
- concessions and exemptions for example, car fringe benefits errors in relation to which vehicles are exempt.