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  • Establish and maintain an effective FBT control environment

    Assign responsibility for the management of FBT

    Government organisations should clearly define and document who carries overall managerial responsibility for FBT administration and compliance, and who carries specific operational responsibility for FBT administration and compliance.

    Overall responsibility for FBT compliance should be formally assigned to a person or work area to ensure that there is ownership and accountability.

    In smaller government organisations, overall responsibility for FBT is typically assigned to the chief financial officer (CFO). In larger government organisations, it may be a finance manager or similar. This person is often a qualified accountant who has an understanding of tax requirements, operational requirements of processing transactions and reporting obligations. They are frequently helped by the person responsible for managing FBT on a day-to-day basis (referred to in this information as the FBT manager).

    There may be a number of people responsible for various aspects of FBT administration in your organisation, or on behalf of your organisation, including:

    • work area managers who certify that fringe benefits provided by their work area have been recorded correctly
    • salary packaging providers who certify that salary packaged fringe benefits have been correctly reported
    • fleet providers who certify that vehicle data provided is correct
    • the FBT manager who certifies to the CFO or finance manager that technical issues have been addressed correctly and that the FBT data is accurate and complete
    • the CFO or finance manager who certifies that the relevant organisation's FBT return is correct.

    Irrespective of how responsibility for FBT management is assigned, FBT managers generally rely on a number of staff throughout the organisation to provide input into the FBT administration process, including:

    • human resources managers who prepare certified agreements and Australian workplace agreements
    • managers who prepare fleet management and salary packaging contracts, organise social functions or take other action that may result in an FBT liability
    • staff responsible for FBT data collection
    • data entry personnel who enter FBT transactions into information systems
    • internal auditors who conduct periodic compliance reviews.

    Government organisations should document key responsibilities for FBT management in formal job descriptions or similar documents. These responsibilities can then be linked to duty statements, annual work plans, performance plans and key performance indicators.

    A record should also be kept of the officer who is registered with us as the signatory on FBT returns and associated documentation. You should review these records regularly so that FBT documentation is executed appropriately.

    Establish and review policies and procedures

    Government organisations should have complete, up-to-date and documented policies and procedures that provide guidance to those involved in FBT transaction processing and reporting.

    Policies and procedures should be written to meet the needs of various work areas, including:

    • staff who input data into the organisation's financial management information system
    • staff who are responsible for collating FBT data for individual work areas
    • managers who approve the provision of fringe benefits for individual work areas
    • staff who are responsible for collating FBT information and preparing the FBT return.

    Staff responsible for FBT data collection should be provided with clear instructions on the FBT information they are to collect. The following documents should be provided to staff involved in FBT administration:

    • A manual outlining both general FBT information and detailed FBT information
      • General FBT information should include a brief description of the types of benefits your organisation generally provides, the treatment of these benefits (for example, whether the benefit is a fringe benefit, or an exempt benefit) and details of what activities may result in a fringe benefit. It should also include details of the implications for staff of receiving reportable fringe benefit amounts.
      • Detailed FBT information should include a description of each benefit type together with relevant legislative references, details of any internally prepared tax position papers, details of any private or class rulings issued by us and details of your organisation's procedures for collecting and collating FBT data.
    • Procedure manuals that provide details of potential FBT implications to consider when making decisions regarding staff benefits, allowances, remuneration packages, certified agreements and Australian workplace agreements. They should include details on how to identify, record and calculate any FBT liability. Manuals should provide detailed guidance on how to plan for and prepare your organisation's FBT return.
    • Policy manuals (for example, Chief Executive Instructions (CEIs)). Your government organisation should have a policy about seeking advice from expert advisors (internal or external) or from us for issues considered contentious, technically complex or unique. Examples may include significant legislative changes or to clarify the treatment of items that are of a high dollar value or are considered high risk items.
    • Private or class rulings, other ATO guidance, external advice and internally prepared tax position papers.

    The above documents should be reviewed by those with overall responsibility for FBT within your organisation regularly for accuracy. They should be adapted to reflect any legislation changes, court interpretations and new or updated ATO views. Any changes to the above documents should be formally communicated to staff.

    Establish and review information systems

    Many government organisations use commercial FBT software products to produce FBT return information. Such products will automatically calculate the taxable value of certain benefits (for example, car fringe benefits) once the required information has been entered. This can reduce the risk of human error in relation to data integrity and the calculation process.

    Suppliers of commercial FBT software products generally provide annual updates incorporating any changes in legislation as part of their license arrangements. As commercial software products may not cater for all exemptions and concessions available to certain organisations, you should review on a sample basis, information produced for reasonableness and accuracy. This also applies if your organisation uses internally developed systems for capturing data.

    Record-keeping requirements

    Your organisation should keep records to support all FBT decisions and calculations. FBT information should be collected, documented and included in your organisation's official record-keeping system. Where data is collected from a number of work areas, source documents should be easily accessible.

    Identify and address training needs

    Staff with any responsibility for the administration of FBT in your organisation should be provided with training commensurate with their level of responsibility and the level of complexity of your organisation's FBT environment.

    Training can be provided in a number of ways, including:

    • external training, such as training provided by a professional organisation, forums where there is formal or informal information sharing or by attending various webinars or external events facilitated by us
    • structured internal training presented by a person with a good working knowledge of FBT
    • on-the-job training.

    Your organisation should ensure staff are provided with refresher training and training on any new developments in respect of FBT. Staff that are assigned overall responsibility for FBT in your organisation should ensure that they receive regular updates on FBT matters that may have a potential impact on the level of compliance, such as implications of providing certain benefits, ATO views and legislative changes.

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      Last modified: 06 Feb 2018QC 18627