Our office received a call from the Australian Financial Review for comment on the ATO looking into non compliance of FBT reporting.
Our office is seeing no decline in employees looking to take advantage of Salary Packaging a motor vehicle under a Fully Maintained Novated Lease agreement.
The reality is that the average PAYG Tax Payer is more informed today than they were, even 5 years ago. They understand that if they earn less than $180,000 per year, that, in many cases, they can make a genuine tax saving, if they set up their Novated Lease Agrement using the “Employee Contibution Method”. This method removes the need to pay FBT, by paying some of the costs from “Post Tax Income”. Not only do they save money, but it also romoves the onus on the employer to return FBT.
The ATO in our opinion is only looking at the reduction in FBT returns, as they believe that they are not receiving the correct revenue.
The most likely answer however is that there is a lack of education of employers. The employer, as he has not FBT liability, is not submitting an FBT return. The reality is, he should be.
As Roger Timms from Taxpayers Australia said, “it would be a quantum leap to conclude that a decline in returns was solely due to non-compliance”.
Phillip Gruppelaar