An audit of a small online clothing business revealed that while it was correctly reporting its income tax and GST, an important obligation was overlooked.
The business had purchased a car which it kept at the business owner's home. The car was determined to be available for private use, and therefore Fringe Benefits Tax (FBT) applied.
The business had also not kept the records needed to use an alternative method for calculating FBT, such as a logbook and odometer readings. As a result, the business ended up with a higher FBT liability than it may otherwise have had.
This wasn't deliberate non-compliance. The business owner was dealing with significant personal pressures and simply wasn't aware of the lodgment obligation.
Once we explained the issue, the business owner worked with us to lodge the required FBT returns and put arrangements in place to manage their obligations going forward.
Stay in the right lane with good record keeping
Even businesses that are getting their income tax and GST right can miss other obligations.
If your business provides a company car that is available for private use, FBT may apply. Keeping good records, including logbooks and odometer readings, can make a significant difference to your tax outcome.
Getting advice early and maintaining good records can help avoid unexpected costs later.
Find out more by about how FBT applies to cars and record keeping for FBT.
You can also speak to a registered tax practitioner for advice.
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