• Step 2: establish, maintain and review policies and procedures

    Entities should have complete, up-to-date and documented policies and procedures that reflect FBT management responsibilities and provide adequate guidance to managers and staff on 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 entity's financial management information system (FMIS)
    • 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.

    Better practice entities will have documentation accessible by various work areas within the entity, as set out below.

    Documentation

    FBT staff

    Work area
    staff

    Work area
    managers

    All entity
    staff

    1. Policy and procedural documents addressing FBT issues (for example, Chief Executive Instructions (CEIs) and associated policy documents

    2. General FBT information, including information on RFBAs

    3. Procedures manuals for staff involved in administering FBT

     

     

    4. Detailed FBT information, including private or class rulings issued by the ATO

     

     

     

    1.

    The level of detail in CEIs and related policy documentation will depend on the structure of each entity's CEIs and associated policies and procedures. Including an entity's FBT requirements in CEIs or equivalent documents will help to raise the awareness of FBT within the entity and encourage the consideration of FBT when making entity decisions such as those relevant to remuneration and staff entitlements.

    2.

    General FBT information should include a brief description of the types of benefits the entity 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 employees of receiving RFBAs.

    3.

    Procedure manuals should provide detailed guidance on how to plan for and prepare the entity's FBT return. The procedure manuals should be detailed enough so that, in the event of staff turnover, new staff members can readily understand and implement the required procedures. The FBT procedure manuals should be updated at least annually to help ensure that they reflect current legislative requirements and entity practices.

    4.

    Detailed FBT information should include a description of each benefit type together with relevant legislative references, details of any internally prepared tax position papers and details of entity procedures for collecting and collating FBT data.

    Review of FBT policies and procedures

    All entities should review their policies and procedures on a regular basis to ensure that they reflect:

    • current legislation
    • ATO guidance
    • entity requirements
    • any improvements identified by a post-lodgment review.

    Better practice is to have the policies and procedures reviewed by a person with a good knowledge of FBT who is aware of legislative changes and changes in entity operations, such as the introduction of a new certified agreement.

    FBT policy and procedures should be readily accessible by all relevant staff. For example, information that is likely to be used by all entity staff should be available on the entity's intranet or a similar medium.

    Attention

    Policies and procedures that are posted on an entity's intranet should be dated so that users can determine whether information may have changed since they last reviewed the site. When substantive changes are made to the intranet site, users should be notified. As many users print information from the intranet and rely on the printed document, they need to be made aware that information has changed.

    The policy and procedures should contain the details of the relevant contact officer(s) staff can refer questions to or seek further information from.

    The content of FBT guidelines placed on the intranet should be reviewed by the FBT Manager and such reviews should be documented.

    End of attention
      Last modified: 23 Jul 2015QC 18627