• Preparation of the FBT return

    One of the most important aspects of preparing an accurate FBT return is ensuring that all fringe benefits have been recognised and all necessary supporting details have been captured and reported.

    This section provides guidance on practices that help entities prepare their FBT return.

    Spreadsheets

    Spreadsheets are an effective tool to capture relevant data, as individual worksheets can be provided by each work area and a summary spreadsheet can be created that links to each work area spreadsheet and feeds into a fringe benefit calculation process such as a commercial FBT software product.

    Entities using spreadsheets in the administration of FBT should ensure they have implemented effective security and access controls designed to protect the integrity of the data entered into the spreadsheets.

    Record-keeping requirements

    Entities should keep records to support all FBT decisions and calculations. FBT information should be collected, documented and included in the entity's official record-keeping system.

    Where data is collected from a number of work areas, source documents should be easily accessible. Better practice is to have copies of all documentation fully referenced to supporting working papers.

    Records may be kept electronically, but if the entity changes operating systems, the records must be stored in a medium that can be accessed at a later date, such as in the event of a ATO audit.

    Section 132External Link of the FBTAA requires that records are kept that explain all transactions and other acts that are relevant for the purpose of ascertaining the employer's liability under the FBTAA, and that those records are retained for a period of five years after the completion of the transactions or acts to which they relate. As mentioned previously, better practice entities will retain FBT records for a period of six years.

    This requirement also applies to fringe benefits provided to employees of an associated entity.

    FBT preparation certification

    It is better practice for each person or work area responsible for collating FBT data to certify that information collated is complete and accurate. This can be done by individual work areas and/or by a centralised FBT area, and is best done by benefit type.

    It is better practice for entities to have certifications reviewed by a second person to provide further assurance over the FBT return preparation process. This second review will generally be performed by a person in a more senior position. Each reviewer should sign the certification for the benefits that he or she has reviewed.

    Example certifications are provided at Figure 5 and Figure 6 below. The certification at figure 5 would apply to an entity where the administration of FBT is decentralised and relies on a number of work areas providing information. The certification at figure 6 would be more applicable for an entity where the collation of FBT data is centralised.

    Declarations

    Entities should obtain all relevant declarations prior to lodging the FBT return, including:

    • otherwise deductible declarations (expense payment, loan, property and residual benefits)
    • recurring fringe benefit declarations (expense payment, property and residual benefits)
    • LAFHA declarations
    • temporary accommodation relating to relocation declarations
    • remote area holiday transport expenses declarations
    • fuel and oil declarations
    • declarations relating to cents per kilometre payments for
      •  relocation transport
      • remote area holiday transport
      • overseas employment holiday transport
      • work-related medical examination, medical screening, preventative health care, counselling and migrant language training
      • employment interview or selection tests
       
    • car substantiation declarations (expense payment, loan, property and residual benefits)
    • no private use declarations.

    Entities are required to elect to use certain valuation methods to calculate the taxable value of certain fringe benefits. For example, entities must elect to use the operating cost method to value car fringe benefits and must elect to use the 50/50 method or 12 week register method to calculate the taxable value of meal entertainment fringe benefits.

    Further information

    For more information on the valuation of car fringe benefits and meal entertainment, refer to Better practices for managing specific fringe benefit types.

    End of further information

    There is no need to lodge an election with the ATO. In most cases, business records are sufficient evidence of the election made.

    Figure 5: example work area certification

    The exact wording of the certification should be customised to reflect the responsibility of individual work areas.

    WORK AREA CERTIFICATION

    This certification is primarily designed for use by individual work groups that have responsibility for collating some fringe benefits tax data but do not have specific operational responsibility for preparing the entity's fringe benefits tax return.

    Benefit type:

     

    Work area:

     

    Taxable value:

    Type 1:

     

    Type 2:

     

    Fringe benefits tax amount:

     

    Documentation/declarations/elections are complete and accurate, support the taxable value, reductions and exemptions applied to this benefit type and are filed with the benefit working papers:   Yes   No

    Comments:

     

     

    File reference/network path:

     

    Preparer's signature:

     

    Date: [dd/mm/yyyy]

     

    Reviewed by:

     

    Date: [dd/mm/yyyy]

     

    Figure 6: example FBT work area certification

    The exact wording of the certification should be customised to reflect the requirements of the work area with specific operational responsibility for preparing the entity's FBT return.

    FRINGE BENEFITS TAX WORK AREA CERTIFICATION

    This certification is primarily designed for use by the work area with specific operational responsibility for preparing the entity's fringe benefits tax return.

    Benefit type:

     

    Work area:

     

    Taxable value:

    Type 1:

     

    Type 2:

     

    Fringe benefits tax amount:

     

    Fringe benefits tax amount included in fringe benefits tax return:

    Yes   No

    Documentation/declarations/elections are complete and accurate, support the taxable value, reductions and exemptions applied to this benefit type and are filed with the benefit working papers:   Yes   No

    Comments:

     

     

    File reference/network path:

     

    Preparer's signature:

     

    Date: [dd/mm/yyyy]

     

    Reviewed by:

     

    Date: [dd/mm/yyyy]

     

    Review of the FBT return

    It is better practice for a separate certification to be signed by the person who reviews the completed FBT return and the person who signs the FBT return. For some entities this may be the same person.

    An example return certification is provided at Figure 7 below.

    Figure 7: example FBT completed return certification

    The exact wording of the certification should be customised to reflect individual entity requirements.

    FRINGE BENEFITS TAX COMPLETED RETURN CERTIFICATION

    I [FBT Manager/FBT reviewer] declare that the information contained in the 31 March [yyyy] fringe benefits tax return, and the accompanying working papers, gives an accurate representation of the fringe benefits tax liability for [entity name].

    Signed:

     

    Position:

     

    Date: [dd/mm/yyyy]

     

    I [FBT Manager/FBT reviewer] declare that the information contained in the 31 March [yyyy] fringe benefits tax return, and the accompanying working papers, gives an accurate representation of the fringe benefits tax liability for [entity name].

    I [                            ] have signed the 31 March [yyyy] fringe benefits tax return. I am registered with the Australian Taxation Office as the authorised signatory for fringe benefits tax purposes.

    Signed:

     

    Position:

     

    Date: [dd/mm/yyyy]

     

      Last modified: 23 Jul 2015QC 18627