Powered by MOMENTUM MEDIA
Receive the latest mybusiness newssign up
FBT overhaul ‘not a priority’ for government

FBT overhaul ‘not a priority’ for government

Tony Greco

The government will be unlikely to abandon fringe benefits tax – despite its high compliance cost to revenue intake ratio – in the absence of holistic tax reform, according to an accounting body.

The Institute of Public Accountants general manager of technical policy, Tony Greco (pictured), said that while the compliance costs of FBT were almost five times higher than other taxes, it would be very unlikely for the government to let go of the revenue stream.

“The government is not going to give up that revenue stream even if it’s 1 per cent; it is an important 1 per cent and in this environment, asking a government to forego a revenue stream is not possible,” Mr Greco said.

Advertisement
Advertisement

“The government doesn’t wear the administrative cost and it’s easy for them to do nothing, but employers wear that and it’s a hidden cost from a government perspective.

“The best you can hope for is to take a lot of the nuisances out of the FBT regime.”

The Board of Taxation is currently reviewing the compliance costs of FBT, releasing some early results which show that tax agents and employers disagree over whether their business practices lower or increase the cost of meeting their FBT obligation.

Mr Greco believes that while it may be too difficult to call for a major overhaul of the FBT regime, some “short-term wins” can be achieved if the board’s review calls for the removal of some administrative headaches.

SPONSORED CONTENT

 

“There are some quick wins, it is document hungry, going to the source to ascertain the proper FBT treatment — that’s what sucks up the time,” Mr Greco said.

“A lot of accounting systems capture data and that’s enough, but when it comes to FBT, you got to get down to the granular level and look and bills, who went where, whether it was on premises or off; you don’t capture that data in the accounting system so that’s where you got to get your head around what you’re capturing versus what the FBT act requires the practitioner to do.

“It gets quite complex when you fully understand the nuisances around the FBT law. It just bogs you down in detail, and from an employer’s perspective, they probably don’t quite get what you need to capture and that’s the nature of the beast that drives everyone mad.

“We all know it is a tax the government still wants to collect, but if you don’t have to jump through so many hoops to get there, I think everyone will see that as a short-term win, and then when you have holistic tax reform, that’s when you can bring out the big guns and look at it long term.”

comments
FROM THE WEB
FBT overhaul ‘not a priority’ for government
mybusiness logo