The government has released a raft of draft legislation with the intention of reducing FBT record-keeping compliance costs for employers. The measure was originally announced by the previous government in the 2020 Budget but never implemented. In brief, it proposed to give the ATO the power to allow employers to rely on existing corporate records, rather than employee declarations and other prescribed records to finalise their FBT returns.
Currently, where an employer is required to lodge an FBT return, they must keep and preserve all records for the fringe benefits they provide for 5 years from the date that the records are prepared, obtained, or from the completion of the transaction. During this period, the ATO may request any of these records for compliance purposes.
Under FBT law, there are numerous provisions which require employees to provide information to their employers about the fringe benefits received, and provide them “in a form approved by the Commissioner”. This consists of more than 20 different ATO approved declarations and evidentiary documents, which forces employers to create more records that may be a duplication of existing corporate records.
To reduce this potential duplication and simplify record-keeping compliance, the draft legislation proposes to give the ATO the power to make legislative instruments to determine the kinds of adequate alternative records which may be kept and retained by employers in lieu of statutory evidentiary documents for specified fringe benefits. The government has also released Draft Determinations which outlines what adequate alternative records for travel diaries and relocation transport looks like.
In general, the minimum amount of information alternative records will need contain for travel diaries consist of the following:
- be in English;
- contain the name of the employee receiving the benefit;
- note the duration of travel;
- for each activity undertaken by the employee in the course of producing their assessable income while undertaking the travel, the:
- place where the activity was undertaken;
- date and approximate time the activity commenced;
- duration of the activity; and
- nature of the activity.
The minimum amount of information that will be required to be contained in adequate alternative records for relocation transport include:
- name of employee or associate of the employee receiving the benefit;
- number of family members travelling in the car;
- make and model of the car driven;
- address of the departure location;
- address of the arrival locations;
- date(s) of travel;
- total number of whole kilometres travelled between the address of departure and the address of arrival.
For other fringe benefit types, the legislative instruments to be made by the Commissioner will give employers the ability to identify the kinds of alternative documents and records that could be used. It will contain information on the years of tax, the classes of persons, the classes of statutory evidentiary documents applying to the relevant fringe benefit, and the kind of alternative documents that may be used. However, the Commissioner is unlikely to specify alternative record-keeping options for all available fringe benefits or all situations where fringe benefits may be provided.
For example, it is anticipated that for records that are exhaustively defined within the legislation, such as log books and odometer records, employers will continue to meet their record-keeping obligations under the current requirements.