Fringe Benefits Tax (FBT) is often overlooked by businesses that provide benefits to employees outside of their salary. However, one of the most compelling reasons to register for FBT—even if your liability is minimal—is the significantly shorter audit period for registered businesses. Understanding this can save you from unexpected scrutiny and potential penalties down the track.
The Limited Audit Period Advantage
When a business is registered for FBT, the Australian Taxation Office (ATO) generally has only three years from the date of lodgment to conduct an audit or review. However, for businesses that are not registered, there is no time limit, meaning the ATO can go back indefinitely to review past financial years. This exposes your business to greater risk and uncertainty.
Key Reasons to Register for FBT
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Reduces Your Risk of a Long-Term Audit
By registering and lodging an FBT return, you set a clear audit window of three years. Without registration, your business remains open to ATO scrutiny indefinitely. -
Avoids Unexpected Tax Liabilities
If the ATO audits an unregistered business and finds FBT obligations that weren’t met, you may be liable for backdated tax, interest, and penalties. Registration demonstrates compliance and can mitigate penalties. -
Clarifies Your FBT Position
Even if you determine that no FBT is payable, registering and lodging a nil return provides certainty that your records have been reviewed and acknowledged by the ATO. -
Ensures Proper Record-Keeping
Businesses that register for FBT are more likely to maintain accurate records and review their FBT obligations annually, reducing the risk of errors or omissions in tax reporting. -
Protects Against Future Business Changes
Your business may not provide many fringe benefits today, but that could change in the future. Having a history of FBT compliance can make future transitions smoother and minimise risk.
Who Should Register for FBT?
Any business that provides employees with benefits beyond their wages—including company cars, entertainment, discounted goods, or reimbursement of personal expenses—should consider registering for FBT. Even if you don’t have a tax liability, lodging a nil return locks in the limited audit period and protects your business.
Take Action Now
If your business provides employee benefits, registering for FBT is a smart move to limit your exposure to ATO audits and potential tax liabilities. Don’t leave it to chance—take control of your compliance and ensure peace of mind for your business.
Need help with FBT registration or compliance? Contact us today to ensure you’re meeting your obligations while minimising risk.
