Assign responsibility for FBT management
Government organisations should clearly define and document who carries responsibility for fringe benefits tax (FBT) administration and compliance at both corporate and operational levels.
Overall responsibility for FBT compliance should be formally assigned to a person or work area to ensure that there is ownership and accountability.
In smaller government organisations, overall responsibility for FBT is typically assigned to the chief financial officer (CFO). In larger government organisations, it may be a finance manager or similar. This person is often a qualified accountant who has an understanding of tax requirements, operational requirements for processing transactions and reporting obligations. They are frequently helped by the person responsible for managing FBT on a day-to-day basis (referred to here as the FBT manager).
There may be a number of people responsible for various aspects of FBT administration in your organisation, or on behalf of your organisation, including:
- work area managers who certify that fringe benefits provided by their work area have been recorded correctly
- salary packaging providers who certify that salary packaged fringe benefits have been correctly reported
- fleet providers who certify that vehicle data provided is correct
- the FBT manager, who certifies to the CFO or finance manager that technical issues have been addressed correctly and that the FBT data is accurate and complete
- the CFO or finance manager, who certifies that the relevant organisation's FBT return is correct.
Irrespective of how responsibility for FBT management is assigned, FBT managers generally rely on a number of staff throughout the organisation to provide input into the FBT administration process, including:
- human resources managers who prepare certified agreements and Australian workplace agreements
- managers who prepare fleet management and salary packaging contracts, organise social functions or take other action that may result in an FBT liability
- staff responsible for FBT data collection
- data entry personnel who enter FBT transactions into information systems
- internal auditors who conduct periodic compliance reviews.
Government organisations should document key responsibilities for FBT management in formal job descriptions or similar documents. These responsibilities can then be linked to duty statements, annual work plans, performance plans and key performance indicators.
A record should also be kept of the officer who is registered with us as the signatory on FBT returns and associated documentation. You should review these records regularly so that FBT documentation is executed appropriately.
Establish and review policies and procedures
Government organisations should have complete, up-to-date and documented policies and procedures that provide guidance to those involved in FBT transaction processing and reporting.
Policies and procedures should be written to meet the needs of various work areas, including:
- staff who input data into the organisation's financial management information system
- staff who are responsible for collating FBT data for individual work areas
- managers who approve the provision of fringe benefits for individual work areas
- staff who are responsible for collating FBT information and preparing the FBT return.
Staff responsible for FBT data collection should be provided with clear instructions on the FBT information they are to collect. The following documents should be provided to staff involved in FBT administration:
- A manual that outlines both general FBT information and detailed FBT information
- General FBT information should include a brief description of the types of benefits your organisation generally provides, the treatment of these benefits (for example, whether the benefit is a fringe benefit, or an exempt benefit) and details of what activities may result in a fringe benefit. It should also include details of the implications for staff of receiving reportable fringe benefit amounts.
- Detailed FBT information should include a description of each benefit type together with relevant legislative references, and details of any internally prepared tax position papers, private or class rulings issued by us and organisational procedures for collecting and collating FBT data.
- Procedure manuals setting out potential FBT implications to consider when making decisions regarding staff benefits, allowances, remuneration packages, certified agreements and Australian workplace agreements. These manuals should include details of how to identify, record and calculate any FBT liability. Manuals should provide detailed guidance on how to plan for and prepare your organisation's FBT return.
- Policy manuals (for example, chief executive instructions). Your government organisation should have a policy about seeking advice from expert advisers (internal or external) or from us for issues considered contentious, technically complex or unique. Examples may include where there are significant legislative changes or to clarify the treatment of items that are of a high dollar value or are considered high-risk items.
- Private or class rulings, other ATO guidance, external advice and internally prepared tax position papers.
The documents above should be reviewed regularly for accuracy by those with overall responsibility for FBT within your organisation. They should be adapted to reflect any legislation changes, court interpretations and new or updated ATO views. Any changes to the above documents should be formally communicated to staff.
Establish and review information systems
Many government organisations use commercial FBT software products to produce FBT return information. Such products will automatically calculate the taxable value of certain benefits (for example, car fringe benefits) once the required information has been entered. This can reduce the risk of human error.
Suppliers of commercial FBT software products generally provide annual updates incorporating any changes in legislation as part of their license arrangements. As commercial software products may not cater for all exemptions and concessions available to certain organisations, you should review, on a sample basis, the reasonableness and accuracy of the information the software produces. This also applies if your organisation uses internally developed systems for capturing data.
Record-keeping requirements
Your organisation should keep records to support all FBT decisions and calculations. FBT information should be collected, documented and included in your organisation's official record-keeping system. Where data is collected from a number of work areas, source documents should be easily accessible.
Identify and address training needs
Staff with any responsibility for the administration of FBT in your organisation should be provided with training commensurate with their level of responsibility and the level of complexity of your organisation's FBT environment.
Training can be provided in a number of ways, including:
- external training, such as training provided by a professional organisation, forums where there is formal or informal information sharing, or various webinars or external events facilitated by us
- structured internal training presented by a person with a good working knowledge of FBT
- on-the-job training.
Your organisation should ensure staff are provided with refresher training, and training on any new FBT developments. Staff who are assigned overall responsibility for FBT in your organisation should ensure that they receive regular updates on FBT matters that may have a potential impact on compliance, such as implications of providing certain benefits, ATO views and legislative changes.
Next step
Establish and review key business systems and processes to help your organisation manage FBT.