ato logo
Search Suggestion:

Identify and assess FBT risks

Effectively manage the way your organisation identifies, assesses, controls and manages FBT risks.

Last updated 11 January 2023

Review your government organisation's FBT obligations

A review into the extent and nature of your government organisation's fringe benefits tax (FBT) obligations is likely to include the following:

  • Determine the relevant employer for FBT. This may differ from the relevant entity for pay as you go (PAYG) withholding or goods and services tax (GST) purposes.
  • Determine the FBT status of the employer (for example, whether it is an income tax-exempt government body, a public hospital, a public ambulance service or an entity subject to income tax). Other than public hospitals and ambulance services, government organisations are not eligible for FBT exemptions or rebates available to not-for-profit organisations. See FBT guide: 6 Not-for-profit organisations and fringe benefits tax in our legal database.
  • Review your organisation's structure to identify work area locations, payments to employees and any structural changes that have occurred during the FBT year.
  • Scope the size, complexity, sophistication and resourcing of the FBT function, including whether processes are centralised or decentralised.
  • Identify the benefits that are likely to be provided to employees (or their associates) of both your organisation and associated entities.

Conduct annual reviews of FBT risks

To effectively manage FBT obligations, it is important to conduct a risk assessment annually or when a restructure occurs that changes the functions undertaken by your organisation. Generally, the most appropriate time for performing a detailed annual risk assessment is within a short time after lodging the FBT return. A less detailed review should be undertaken before lodging the FBT return.

Evaluating FBT risk involves:

  • identifying a range of options for treating risk
  • assessing those options
  • deciding the controls appropriate to the identified risks.

The nature of your organisation's FBT risks may depend on:

  • how staff understand and interact with FBT legislation
  • systems and processing risks associated with day-to-day management of FBT administration and reporting.

You should consider a combination of preventive and detective controls for managing FBT risks. The level and complexity of these controls should be directly proportional to the assessed extent of the risk as it relates to FBT compliance.

You should document the results of the FBT risk assessment. Better-practice entities maintain an FBT risk register in a form that is consistent with the organisation's overall risk assessment framework. Such a register can help ensure that risks are regularly reviewed and managed effectively.

Next step

QC71187