It's that time of year ... when that overly complicated area of tax law becomes front of mind again. (A tax which accounts for just 1.2% of tax revenue should not have so many different provisions and calculation rules!)

So what exactly should accountants be aware of when preparing thier clients' FBT returns this year?

Three of the more significant changes which will affect the returns you prepare for the 2011-12 FBT tax year are:

1. Car fringe benefits

Under the new provisions (which apply to new vehicle contracts entered into after 10 May 2011), there is just one flat rate of 20% that applies regardless of the distance travelled. This flat rate will be phased in over the course of four years (although an employer can elect to jump straight to the flat rate if it doesn't disadvantage the employee).

Under the old provisions, the more an employee drove, the lower the tax rate - creating a rather politically incorrect incentive to drive more which was doing nothing to improve our carbon footprint. (Although - and call us cynics - we suspect that the Government's decision to make this change had more to do with an estimated $1.1 billion in "lost" revenue rather than any environmentally based motivation!)

You can read more here.

2. Extension of the exemption for fly in / fly out arrangements

This exemption has been extended to cover travel between home and work sites for fly in / fly out employees working overseas and their employers (subject to certain conditions being met).

This change was driven by a need for more certainty and consistency and to remove the possibility of double taxation of fly in / fly out benefits received by Australians working in remote overseas locations.

The changes apply retrospectively from 1 July 2009, and there are provisions allowing for amendments to be made to any reported fringe benefits by employers and employees.

You can read more here.

3. Tax concessions available to non-profit organisations

Where a non-profit organisation carries on commercial activities that are unrelated to its charitable purpose, the organisation will not qualify for a range of tax concessions, including FBT concessions, in relation to those unrelated commercial activities. 

This change commenced on 1 July 2011 and affects any new unrelated commercial activities that a not-profit organisation began after 10 May 2011.

You can read more here.

As for what lies ahead, you need to be aware of changes to the living away from home allowance and benefits which will apply from 1 July this year (you can read more here).

Tax planning isn’t something that accountants should do for their clients once the calendar ticks over to 30 June, but something that is planned for and managed throughout the year.

This is certainly not a revelation in thought, rather a reminder of the importance of providing considered tax planning services well before tax time.

But for many accountants struggling with the dual burden of completing accounting and tax compliance jobs and staying up-to-date with current taxation regulation, finding both the time and the right process needed to deliver effective tax planning advice to clients can be incredibly difficult.

This is where having the right tax planning tools comes into play.

To be truly effective, your tax planning tools (by which we mean the set of procedures, workpapers and checklists your team relies on to guide them through the tax planning job process) must (1) empower your team to cut back on the amount of time it takes them to prepare and deliver tax planning advice and (2) provide you with confidence that your team are considering everything they should be in order to deliver sound advice.

So how can you know whether your tax planning templates (or, for that matter, any set of templates relied on by your firm) are effective? Here’s a few pointers:

- They must always be up-to-date (for the latest rates, legislative changes and industry best practice).

- Updates must be shared with team members well in advance of the point at which they will need to rely on them (for familiarisation and training purposes).

- They must make it easy for your team to complete them electronically or on paper (to suit all preferences).

- They must allow your team to select those items which need to be considered for the job at hand, given the particular circumstances of the client (one size does not fit all clients).

- They must be flexible in their design, so that they are useful and relevant for junior accountants (who tend to rely on them for guidance and learning) as well as those more experienced (who tend to refer to them only for a ‘checklist’ function).

Frequently, accounting firm partners and principals find that relying on a reputable external provider for tax planning and other templates is the more cost and time-effective approach. After all, with the many client engagements to keep them busy throughout the year, just how many accountants have the time to spend creating and maintaining their own (effective) templates?