This article was originally published on Tech Business News.
By Dan Winson, Founder and CEO, Zetifi
Replacing legacy record keeping solutions with a detailed digital usage log saves time and reduces risk.
Are you confident your records will stand up to scrutiny, if your organisation is flagged for an audit?
It’s a question millions of individuals and organisations will be forced to ponder, as the Tax Office continues with its tough stance on compliance and revenue collection, following a prolonged period of pandemic leniency.
Around two million individuals and businesses are selected for audit each year, including organisations whose activities, records or audit history are a trigger for additional scrutiny.
A field audit or detailed tax investigation could see ATO officials visiting your premises to examine your financial records, assess your compliance and conduct in-depth analysis to surface anomalies.
Having files combed through and questions asked is no one’s idea of a good time. Even punctilious bookkeepers and financial controllers with little to fear can find the process time consuming and stressful.
The risk of FBT record keeping fails
A common area of contention is fringe benefits tax, particularly where it relates to company vehicles that are used by employees for both business and private purposes.
Where an organisation wants to substantiate its actual business use rather than default to a flat statutory rate, it needs to track each vehicle’s journeys, via a logbook, for the representative period.
It’s a modus operandi that relies heavily on staff doing the right thing – making an accurate entry in the logbook for every business journey during the mandatory time period, or ensuring travel data is captured in its digital equivalent.
Unfortunately, this sort of diligence is far from a given. It’s all too easy for an employee to omit to log a journey or several, if they’re distracted, in a hurry or simply can’t be bothered keeping their paperwork up to date.
If a vehicle is part of a pool that’s accessible to multiple staff who don’t keep records of their appointments and outings, attempting to fill in the gaps retrospectively can be challenging.
Moreover, obvious attempts to do so are unlikely to impress the ATO’s audit team, should your organisation come into their sights.
Telematics tools that make the task easy
Fortunately, there is a smart, safe way to ensure you’ve captured the vehicle usage data you need to substantiate your FBT position and liability.
Latest generation telematics technology with automated trip capture can take the hard work and hassle out of record keeping and deliver a comprehensive, accurate log of all the journeys employees have taken in fleet vehicles.
A best of breed solution can be deployed to log trips automatically and track the kilometres driven. Simple tap-on buttons or apps can be used to assign trips to drivers, classify their purpose and record the required details for business trips, in the moment.
And at the end of the day, week or month, a list of unassigned trips can be created for follow up; putting paid to the challenge of attempting to verify usage records at tax time, long after the fact.
Adopting this technology won’t only reduce employee workload and audit risk: it will ensure your organisation doesn’t disadvantage itself financially by paying more tax than necessary because it can’t substantiate the legitimate business use of its vehicles.
Partnering with a firm that helps you extract maximum value from telematics
Not all telematics technology vendors are the same. It pays to partner with one whose method of data capture meets the ATO’s record-keeping requirements, so your vehicle usage records are easily defensible in the event of an audit.
Ideally, they’ll have the capacity to liaise with your finance team or accountant, and to help your organisation get their telematics solution up and running in your back office.
With their support, ingesting telematics data into your organisation’s Microsoft database, where it’s easily accessible for reporting purposes, should be a straightforward matter.
Mitigating the risk of FBT dramas in 2027
Keeping detailed, accurate records all year round is an effective way to reduce audit risk.
Telematics technology with automated trip capture can help your organisation capture the data it needs to substantiate its FBT claims on company vehicles. If boosting compliance is a priority, it’s an investment that will serve you very well, in the 2027 FBT year and beyond.
Note: While telematics can significantly improve record keeping and substantiation, organisations should continue to review their vehicle arrangements, employee declarations and FBT obligations with their accountant or tax adviser to ensure ongoing compliance.
