We look out for situations where an employer provides a motor vehicle to an employee who uses it for private travel or has it available to use privately.
Both the actual private use of a motor vehicle and its availability for private travel are fringe benefits. This means that the employer may have a fringe benefits tax liability.
Situations that concern us include when employers:
- fail to identify or report these fringe benefits
- incorrectly apply exemption provisions
- for vehicles that are not eligible
- by treating all travel as business
- incorrectly claim reductions for these benefits without the appropriate records to support the reduction.
Additional resources can be found in the Fringe benefits tax – a guide for employers:
- Chapter 7 – Car fringe benefits
- Chapter 18 – Residual fringe benefits (refer to section 18.6 'Taxable value of motor vehicles other than cars')
- Chapter 4 – Fringe benefits tax record keeping
- Fringe benefits tax – car calculator
The general effect of an employee contribution to benefits is that it:
- reduces the amount of fringe benefits tax payable (see, Reducing your FBT liability)
- is included in the employer's income.
We look out for mismatches between the amount reported as an employee contribution on the fringe benefits tax return and the income amounts on the employer's tax return.
For more information see, Fringe benefits tax - a guide for employers Chapter 2 – Calculating fringe benefits tax.
If you provide your employees or their associates with food and drink, gifts or leisure activities (such as Christmas parties and business lunches) you may have a fringe benefits tax liability.
We look out for situations where employers are providing entertainment activities to their employees and the expenses are:
- claimed as deductions in their tax return without correctly reporting and paying fringe benefits tax
- classified as sponsorship or advertising where there is an entertainment aspect to the activity.
See Fringe benefits tax - a guide for employers:
You are required to obtain a valuation report to support the calculation of car parking fringe benefits from a suitably qualified valuer and substantiate the market valuation.
We are aware that COVID-19 has affected the rates of commercial parking in many areas, and that market valuations may be impacted as a result.
For car parking, situations that concern us include when the calculation is based on:
- nil market valuations or market valuations that appear to be significantly discounted
- parking rates that are not representative of commercial parking in the area
- parking rates that are not supported by evidence.
See Fringe benefits tax - a guide for employers Chapter 16 – Car parking fringe benefits.Some FBT issues are around motor vehicles, employee contributions, entertainment and car parking valuation.