Personal motor vehicles expenses paid by business

[Accountix]

Hi all

This is a question directed towards tax accountants.

I run my own bookkeeping business for which I have quite a few small clients who pay their own bills and I come along and record the entry after the transaction has occurred.

I am continually faced with the problem of businesses (for the sake of discussion, lets say pty ltd companies) paying running costs and petrol for vehicles owned by employees. These vehicles commonly have a large personal use %.

My understanding is that if they are doing this, then the company should be lodging a FBT return.

What gets even more complicated is that I have clients who are paying some running costs from the business and some the employees are paying personally. e.g. the employee has a company fuel card yet the employeee is paying for servicing. I even have some clients where the business is paying for the servicing direct to the suppliers and the employee is paying the fuel personally.

What is the best way to recod these entries. I have been coding all these expenses to motor vehicle expenses and informing the clients tax accountant of what has happened so they can make a decision of weather a FBT return needs to be lodged.

Most clients don't want anything to do with a FBT return. To avoid a FBT return needing to be produced is there something else I can do. I am thinking along the lines of gathering all these expenses together and moving them to travel allowance paid and putting them on the employees PAYG summaries.

Hoping someone can point me in the right direction.

Shane Holbeck - Accountix
www.accountix.com.au

[Dardee]

In these situations I would do exactly what you have done. Record them to one account (Motor Vehicle Expenses) and provide their accountant with a breakdown of the account (ie who has what cars, fuel cards etc). Its really up to the client and accountant to make the decisions.

As a bookkeeper I discuss these types of situations with the client and advise that I will get all the info together for them to speak to their accountant. What they choose to do is really not up to me.

[JamesMillar]

They can be treated as a re-contribution into the business to reduce or potentially completely eliminate any FBT under the statutory method for Car Fringe Benefits. There are GST effects for this as well.

Speak with their accountant. There are also plenty of good FBT training courses for accountants / bookkeepers / non accountants. Probably around $500 for one day but it sounds like money well spent if you are coming across this regularly. I'd recommend the NTAA training courses over CPA / CA.

[seb]

Might want to also reffer them onto www.autocarlog.com to manage their log books. I run the business and could potentially work out a way for you to manage a fleet of vehicles. PM me if interested.

[FletcherTax]

I agree with Darren - bring it to the accountants attention via a suspense account, a 'for accountant' expense account or a clear note to the accountant explaining your concerns and what you have done so far.

At tax or bas time, the accountant will reply and provide an answer for how to deal with this type of expense.

NTAA courses are great if you'd like to expand your professional knowledge - practical!