The ATO main target this year includes … businesses that have bought cars and living away from home allowances.
Datamatching has become more sophisticated over the years to the point where there are not many transactions businesses or individuals can make without the ATO knowing about it. While the team at the ATO don’t go through data line by line they do look at anomalies. These anomalies, or exception reports, narrow down who should come under scrutiny. If you or your business comes up on one of these lists the first thing that will happen is that the ATO will reach out and start asking for more information to validate your position. This is why having your documentation in place is so important. If you don’t have records validating your position the next step might be an audit.
One of those anomalies this FBT year is where a business has purchased vehicles but fringe benefits have not been reported to the ATO. While this position might be legitimate, it’s important to have the documentation backing up your position.
While the changes to the living away from home allowance (LAFHA) rules have been in place for a number of years, it’s an area of continued consternation for the ATO. One of the key issues is whether the employee is actually living away from home, as opposed to simply travelling in the course of their work or relocating. If you provide these benefits to employees, you need to ensure you have sufficient evidence to support any exemption claimed and that the employee has met the relevant conditions. It’s up to the employer to not only obtain the signed LAFHA declaration from the employee, but also to verify and retain records to evidence that the employee or their spouse has retained an ownership interest (i.e. ownership of or a lease agreement over) in the home that they are living away from and that it remains available to them while they were required to work in another location by the employer.