FBT Risk Management; the ATO’s approach

The ATO is continuing to focus on the tax governance processes of large businesses during audits and the reason is simple; its actively considering taxpayers ability to comply in future, not only the past.

In this regard, the ATO is continuting to develop and strengthen its Tax Risk Management and Governance review guide to allow businesses (at Board & Managerial level) to better understand what good corporate governance looks like.  It encourages businesses to:

  1. Develop their own tax governance and internal control framework;
  2. Test the robustness of their corporate governance framework against the ATO’s benchmarks; and
  3. Develop policies, controls & training to mitigate risk.

This has been the ATO benchmark for audits over the last couple of years and will continue to be its approach when determining a taxpayers overall risk rating.

Fringe Benefits Tax (FBT) Risk Managemnet & Governance

Fringe Benefits Tax (FBT) risk management and Governance involves:

  • Implementing appropriate controls to review compliance risk;
  • Documenting policies, procedures, roles and responsibilities;
  • Regular internal/external assurance reviews; and
  • Regular staff training to keep up to date with ongoing reforms & developments.

The ATO’s audit focus will continue to consider a taxpayers ability to comply in future, not only the past.

A large proportion of large corporates are not fully satisfied with their internal controls and documented procedures for managing their Fringe Benefits Tax (FBT) obligations (taking into consideration the size and complexity of their organisation).

Accordingly, this is a perfect time for businesses to revisit their Fringe Benefits Tax (FBT) controls, policies and procedures, in time to be tested during the current 2024 FBT compliance period.

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