As we approach the 2025 Fringe Benefits Tax (FBT) season, employers must start planning their annual FBT return process to ensure compliance while minimizing tax burdens. This year, the Australian Taxation Office (ATO) has introduced new record-keeping requirements, effective from 1 April 2024, aimed at simplifying compliance and reducing administrative burdens.
For businesses and investors, understanding these changes and ensuring compliance is crucial to avoiding tax risks and optimizing costs. This article will guide you through the key steps for FBT preparation and introduce the latest alternative record-keeping methods to help you navigate the process with ease.
1. Identifying the Right FBT Employer – Avoiding Common Mistakes
Who needs to lodge an FBT return?
Any employer providing taxable fringe benefits in Australia is required to lodge an FBT return, regardless of whether they are part of a larger corporate group.
Common misconception:
Many businesses mistakenly assume that a consolidated FBT return can cover an entire corporate group, but in reality, each employer providing fringe benefits must lodge an individual FBT return. It is crucial to determine which entities are employers and understand their specific FBT obligations to avoid compliance risks.
2. Understanding Key FBT Deadlines
The 2025 FBT tax year runs from 1 April 2024 to 31 March 2025. During this period, all fringe benefits provided to employees must be assessed to determine whether they are taxable, exempt, or eligible for reductions.
Lodgement deadlines:
- Paper lodgement: 21 May 2025
- Electronic lodgement via a registered tax agent: Extended deadline – 25 June 2025
How to Ensure Timely Lodgement?
- Work backwards from the deadline – Plan a compliance timeline that allows ample time for internal reviews and adjustments.
- Start data collection early – Gather necessary information from HR, finance, and tax teams, such as payroll data, asset registers, vehicle lease schedules, and parking benefits.
- Ensure cross-department coordination – HR teams need to provide reportable FBT data by specific deadlines to ensure ATO employee income statements are correctly updated.
Pro Tip: The earlier you start, the smoother your process will be!
3. Streamlining FBT Compliance with Automation & Smart Tools
FBT preparation involves handling large volumes of data, making manual processing both time-consuming and error-prone. Businesses should consider leveraging automation tools to enhance efficiency:
- Intelligent data management systems (to categorize and process FBT data automatically)
- Automated GL transaction identification (to extract FBT-relevant transactions from general ledgers)
- Vehicle & parking benefit automation (to reduce manual calculations and errors)
Case Study:
A business that implemented automated FBT processing tools reduced manual review time by 60% while enhancing accuracy and compliance controls.
4. New 2025 FBT Record-Keeping Requirements – A Game-Changer for Employers
From 1 April 2024, the ATO has introduced alternative record-keeping options, allowing employers in certain cases to use existing business records instead of employee declarations when substantiating FBT claims.
What does this mean for businesses?
- More flexibility – Employers can choose whether to use new alternative records or continue using traditional employee declarations.
- Less administrative burden – Simplifies compliance by eliminating unnecessary paperwork.
- Easier documentation – Internal records can now be used to validate FBT claims.
Key fringe benefits eligible for alternative record-keeping:
| Benefit Category | Alternative Record Requirements |
|---|---|
| Temporary accommodation for relocation | Must contain employee details & accommodation type |
| Private use of vehicles (excluding cars) | Must record vehicle details & kilometers traveled |
| Fly-in-Fly-out (FIFO) / Drive-in-Drive-Out (DIDO) benefits | Must document employee work arrangements |
| Car travel for job interviews | Must include travel details related to interviews |
| Car travel for work-related activities | Must record employee travel details |
| Relocation transport benefits | Must include reimbursement details & travel specifics |
| Otherwise deductible benefits | Must document benefit details & dates |
| Overseas employment holiday transport | Must record employee & family travel details |
| Travel diaries | Must include employee travel details & work activities |
| Living-Away-From-Home (LAFH) allowance | Must document Australian residence & LAFH details |
Case Study:
A business replaced traditional employee declarations with work calendars & itineraries, leading to a 30% improvement in FBT efficiency while maintaining full compliance.
Warning!
Employers must ensure alternative records meet ATO guidelines. If in doubt, businesses may continue using ATO-approved employee declarations while transitioning to the new process.
5. ATO’s Focus Areas – How to Minimize FBT Risks?
The ATO is increasing its scrutiny on FBT compliance and is actively identifying underreported or misclassified benefits. Key risk areas include:
- Company vehicle benefits (private use of company cars)
- Expense payment fringe benefits (reimbursement of personal expenses)
- Misclassified or unreported FBT transactions
ATO’s Latest Compliance Initiatives:
- Using AI & data analytics to identify high-risk FBT claims.
- Providing free online FBT compliance webinars (available on the ATO website).
How to Ensure FBT Compliance?
- Review FBT records thoroughly to avoid misclassification.
- Use automation tools to minimize manual errors.
- Consult tax professionals to ensure compliance and optimize tax efficiency.
Need FBT Compliance Support? Let Boa & Co. Guide You!
FBT compliance is complex and requires strict adherence to tax regulations. If your business faces any of the following challenges:
- Uncertainty about FBT lodgement requirements
- Choosing the best record-keeping method
- Minimizing FBT liabilities
Boa & Co. specializes in FBT compliance and tax advisory, ensuring that your business stays compliant while maximizing tax efficiency. Call 1300 952 286, email [email protected], or visit www.boanco.com.au for more information.
Simplify Your FBT Process – Act Now!