Alternatives to employee declarations for FBT
Employers that provide certain fringe benefits to their employees can now use appropriate alternative statutory evidentiary documents to satisfy FBT requirements with the registration of legislative instruments specifying acceptable record-keeping obligations for certain fringe benefits.
These instruments, along with complementary legislation passed in 2023, seek to reduce the FBT compliance costs for employers.
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Current FBT record keeping requirements
Under the FBT law, employees are required to provide information to employers about fringe benefits received, and employers are required to prepare declarations in a form approved by the Commissioner.
As a part of record keeping obligations, information and declarations are required to be kept for 5 years and the ATO may request these records for compliance purposes at any time.
On the ATO website, there are 20 different approved employee declarations for various fringe benefits including expense payment fringe benefits, LAFHA, property fringe benefits, residual benefits, loan benefits, car and fuel, holiday transport, temporary accommodation, and relocation. In addition to approved employee declarations, there are also two employer declarations and a travel diary requirement currently used as statutory evidentiary documents for FBT purposes.
This current requirement for certain records to be in an ATO approved form to comply with FBT record keeping obligations means that some employees and employers may be forced to create additional records despite the required information already being captured through other processes such as corporate records.
New option to rely on alternative records
From 1 April 2014, employers will have the option to rely on existing or other alternative records as determined by the Commissioner by way of legislative instrument for some types of fringe benefits. However, these instruments do not generally change or reduce the information employers need to hold to validate their FBT return, and only alters the prescriptive format and processes for obtaining and holding that information.
While the option to use alternative records will generally reduce the FBT record keeping burden for employers, the Commissioner will not necessarily specify alternative record keeping options for all available fringe benefits or situations.
Where records are extensively defined within legislation such as log books or odometer records, employers will generally need to continue to meet their record keeping obligations under current arrangements.
Legislative instruments on acceptable alternatives to statutory evidentiary documents that have been registered relate to the following FBT benefits:
- living-away-from home allowance (LAFHA) – maintaining an Australian home;
- temporary accommodation relating to relocation;
- fly-in fly-out and drive-in drive-out employees;
- private use of vehicles other than cars;
- car travel to certain work-related activities;
- car travel to employment interview or selection test;
- travel diaries;
- relocation transport;
- overseas employment holiday transport; and
- otherwise deductible benefits.
Application
The legislative instruments apply from 1 April 2024 (i.e. they apply for the FBT year ending 31 March 2025). They outline the specific information required for an alternative record to be acceptable in each FBT category. For instance, the record will need to be in English and will need to contain names of employees/associates, make and model of car, address of departure/arrival location, dates of travel and number of whole kilometres travelled, to name a few.
Each legislative instrument outlines the years of tax, the classes of persons and the classes of statutory evidentiary documents or records an employer may use to satisfy their alternative record keeping obligations.
In circumstances where the Commissioner is not “reasonably” satisfied that adequate alternative records are available for certain fringe benefits, employers will be expected to continue using existing approved forms to ensure that statutory evidentiary documents that meet record-keeping obligations are retained.
Disclaimer: The information on this page is for general information purposes only and is not specific to any particular person or situation. There are many factors that may affect your particular circumstances. We advise that you contact Mathews Tax Lawyers before making any decisions.