It’s a legal requirement to lodge a Fringe Benefits Tax (“FBT”) return if you are an employer and you provide fringe benefits to your employees.  For many small businesses an often overlooked “employee” is the owner – they are included as an employee for FBT purposes and as such is an easy win for the ATO.  Even if you have a nil return, it’s still important to lodge a return in order to meet your obligations under the law.

Lodging a nil return shows the ATO many things:  firstly that you have met (and considered) your reporting obligations and have taken the necessary steps to comply with the law. Failing to lodge a return, even if it’s a nil return, can result in penalties, fines, and interest charges.  Secondly, it “stops the clock” in terms of the period of review the ATO can use should they decide to select your business for an FBT review for example;  your FBT liability is nil so you do not either register for FBT or lodge a FBT return.  The ATO selects your business for a FBT review and finds that in actual fact there were items subject to FBT which should have been reported.  Because no returns have been lodged they are able to look back at an unlimited period number of previous years records and levy FBT.  If a nil return has been lodged they are limited to the legislated period of review (currently 3 years).

In some cases, the tax authorities may also perform an audit to ensure that you are meeting your obligations, and having a lodged nil return can demonstrate your compliance even if what is in the returns ends up being disputed, you have shown responsibility by lodging the returns.

In summary, lodging a nil FBT return demonstrates your compliance with tax regulations and can help to avoid penalties and fines, so it’s important to meet this legal requirement.