Fringe Benefits Tax: Why Not Lodging FBT Could Trigger an ATO Audit
Why challenging your accountant on FBT (Fringe Benefit Tax) might be one of the smartest moves you make this year.
Many business owners assume Fringe Benefits Tax doesn’t apply to them—but with the ATO’s increasing use of data matching and AI, that assumption could be risky.
With the FBT year ending on 31 March, it’s the perfect time for business owners to take stock of any extra benefits provided to staff over the past 12 months. These benefits—while great for employee satisfaction—can come with important tax implications.
What is Fringe Benefits Tax (FBT)?
FBT applies to non-cash benefits provided to employees or their associates in connection with employment. Some common examples of fringe benefits include:
- A work car used for private purposes
- Gym memberships
- Entertainment provided to employees
- Benefits under salary sacrifice arrangements
What do I have to do to comply?
- Determine Your FBT Liability: Ask your accountant to assess whether your business has an FBT liability for benefits provided between 1 April 2024 and 31 March 2025.
- Lodge and Pay by the Deadline: If you have an FBT liability, you must lodge an FBT return and pay the amount due by 21 May. Most of the time, the team at MJC can use an employee contribution strategy to ensure that No FBT is actually payable, however it is the process of lodging that keeps the ATO audit activity at bay. That’s right – no tax and no audit risk. It’s a win-win.
- Notify the ATO if You Don’t Need to Lodge: If you’re registered for FBT but don’t have a liability this year, let the ATO know.
- Report Fringe Benefits in Employee Payments: Include each employee’s reportable fringe benefits amount in their end-of-year payment summary.
Is it likely that my business provides benefits that are subject to FBT?
Review Your Business Expenses
Whilst there are many examples of ATO cross referencing activities that could lead to a larger ATO audit, the best place to start is by looking at the expenses that your business claims.
Take motor vehicles, for example. If your business claims car expenses or has vehicles on the depreciation schedule but doesn’t lodge an FBT return, it could invite unwanted ATO attention. The same goes for entertainment expenses—another favourite audit trigger.
Review Your Business Structure
If your business operates through a company or trust, and especially if you own motor vehicles, there’s a strong chance you should be lodging an FBT return. Not because you’ve done something wrong, and not necessarily because there will be tax to pay—but because it’s a smart move to stay compliant and off the ATO’s radar.
Is it time to review your business structure or seek advice?
Summary
Let’s be honest—FBT is often seen as a hassle by business owners and accountants alike. But ignoring it can be a costly mistake. The ATO relies heavily on FBT data to trigger audits, and not lodging when you should be can raise serious red flags.
Even if FBT hasn’t been on your radar before, that doesn’t mean it won’t be soon. The ATO’s data-matching capabilities—now supercharged by AI—are evolving rapidly, making it easier than ever for them to identify businesses that aren’t lodging when they should be.
So, if you’re unsure about your FBT obligations, now is the time to act. Call your accountant and ask them if you are lodging and if not, why not?
At MJC, we’re here to help you make confident, informed decisions—working with you, growing with you, and adapting with you every step of the way.
Source: ATO website
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