Strengthening Our Approach to FBT, Motor Vehicles and Entertainment
Fringe Benefits Tax (FBT) remains one of the most misunderstood areas of business taxation – particularly in relation to motor vehicles and entertainment expenses.
If your business provides a vehicle to an employee or director and that vehicle is available for private use, FBT may apply. Private use includes home-to-work travel and garaging a vehicle at home. Even where a vehicle is described as “work only”, the rules are technical and documentation is critical.
Entertainment is another common risk area. Client lunches, staff events, tickets to sporting events, and meal entertainment can all trigger FBT depending on how they are structured and recorded.
The ATO continues to focus on:
- Dual cab utes treated as exempt without proper analysis
- No logbooks maintained where required
- Fuel cards provided without documentation
- Employee contribution methods not implemented
- Incorrect treatment of meal entertainment
- Incorrect coding of vehicle and entertainment transactions in Xero
Often, these issues only become apparent during an ATO review.
Raising the Standard at Carey Group
At Carey Group, we are strengthening our internal FBT processes to ensure our advice is consistent, defensible and aligned with current ATO expectations.
We are implementing a formal FBT framework across the firm, including:
- A documented “Carey Way” FBT procedure manual
- Standardised working papers and review checklists
- Clear documentation requirements
- Annual motor vehicle and entertainment review protocols
Importantly, we are also developing a best practice guide for clients, which will outline:
- How motor vehicle arrangements should be structured
- When logbooks are required
- How employee contributions should be recorded
- How to correctly account for vehicle transactions in Xero
- How to correctly account for entertainment and meal expenses
- When entertainment attracts FBT and when it may be exempt
- Common coding errors that create unnecessary FBT exposure
This guide will provide practical, step-by-step clarity so clients can reduce compliance risk at the source.
Consulting an FBT Specialist
To further enhance our capability, we are engaging an independent FBT specialist to review our processes and deliver structured training to our team.
This review will:
- Identify technical or documentation gaps
- Benchmark our approach against industry best practice
- Strengthen internal training around motor vehicles and entertainment
FBT is a specialised and evolving area of tax law. By investing in specialist input and structured processes, we are taking a proactive approach to protecting our clients and reducing audit risk.
What This Means for You
You may notice more structured FBT questionnaires or requests for:
- Vehicle details and odometer readings
- Clarification around private use
- Breakdown of entertainment expenses
- Review of how items are coded in Xero
This is deliberate.
Our focus is to ensure:
- Your vehicle and entertainment arrangements are correctly structured
- Transactions are coded properly in Xero
- Documentation supports your position
- FBT exposure is properly managed
If you would like a review of your current arrangements, please contact our team.
A proactive approach to FBT today can prevent costly issues tomorrow.
