Better practices for the administration of FBT
FBT impacts Australian Government entities in two ways:
- Entities are required to administer their FBT liabilities in a manner that enables full compliance with Australian tax laws.
- Entities are required to determine and accurately report reportable fringe benefit amounts (RFBAs) for individual employees.
FBT impacts many work areas within entities and requires a broad organisational approach to adequately manage it. FBT also has direct implications for many employees, as RFBAs need to be disclosed on individual payment summaries. Therefore, it is particularly important that entities keep employees fully informed of the possible RFBA implications of receiving fringe benefits.
Entities should have the structure, processes and controls in place to enable them to meet their FBT obligations in an accurate, timely and cost-effective manner.
The requirement to report RFBAs on employee payment summaries means that the accuracy of the fringe benefit calculations can impact employees at a personal level. Therefore, it is particularly important that employees are fully informed about the possible implications of RFBAs.
The way that entities apply the five better practices relating to the administration of FBT will depend on their particular operating environment, particularly their structure and the number and type of benefits provided.
Entities are encouraged to review their existing policies and practices against the five better practices outlined.