ATO Audit Activity
The Taxation Office has been given more funding and resources which will result in an increase in compliance activities in the future. Compliance activities will focus on the following:
- Wealthy individuals — net worth >$5M
- High wealth individuals — net worth >$30M
- SME’s — focus on flow of funds from businesses to individuals and wealth transfer
- Trusts — data matching distributions to beneficiaries
- Building and construction — data matching under the new reporting system
Fringe Benefits Tax — Cars
The proposed changes to the FBT treatment of cars removes the statutory formula method for new contracts entered into after 16 July 2013, effective from 1 April 2014.
The statutory formula method provides a tax concession for employees who used their car for private purposes, as it assumes a high business use which may not have necessarily been the case.
Taxpayers using the log book method will not be affected under the changes.
If you are thinking about acquiring a new car which will be subject to FBT the question is what to do given the current political landscape.
Some options to consider may include:
• Consider implications using the log book method
• Defer any car decisions until there is certainty whether the changes will become law
If the changes actually become law, the FBT cost will almost double where the employee’s car has little or no business use.
Given the uncertainty in relation to the proposed changes it may be prudent to adopt a ‘wait and see approach’ and defer making any decisions.
Should you have any questions or need to make a decision about a car purchase, contact David or John to see whether we can help you.