Better practice 1: identify FBT risks
This section outlines some better practices that can help entities identify and manage the risks associated with their FBT administration.
Risk management is an essential part of effective corporate governance within Australian Government entities. The risk management process generally used in Australia is modelled on the Australian/New Zealand Standard AS/NZS 4360:2004 Risk Management. The standard and guidelines for managing risk in the Australian and New Zealand Public Sector contain more detail on the process of managing risk.
FBT administration presents a number of risks that need to be identified and assessed and, where appropriate, have controls and risk treatments implemented to manage them. The impact that FBT has on employees means that entities need to consider FBT risks from both a legislative compliance and a personnel management perspective.
While for most Australian Government entities risks associated with FBT are unlikely to be significant in the context of all their strategic risks, better practice entities will include FBT risks in their broader operational risk framework. Well managed FBT administration will generally provide entities with benefits such as:
- increased likelihood of complying with the FBT legislation
- complete and accurate capture of transactions that give rise to fringe benefits
- paying FBT instalments on time
- better management of employee expectations in relation to RFBAs
- accurate and timely reporting of RFBAs
- cost efficient processing
- being able to effectively manage ATO audit activity.