Review the FBT calculation

TABLE OF CONTENTS

• Review the benefits
• Review the attribution
• Review the vehicles and drivers
• Review the sense checks
• Review the tax position
• Review the provision reports
• Review the settings

The system calculates the attributed FBT liability for the year, based on the data you entered for the four quarters. Once you have imported all of the data and made any necessary amendments, you need to check the FBT calculation to ensure everything makes sense before you finalise the calculation and complete the FBT return.

Here are the items we recommend you review:

• Benefits
• Attribution
• Vehicles and drivers
• Sense checks
• Tax Position
• Provision reports
• Settings

Review the benefits

Click the Workpapers tab > Benefits.

Look at the Taxable% column to see if there are any percentages less than 100.00%. If there are, investigate to find out why, and ensure the benefits were added correctly. It may be that some benefits have been disregarded for FBT calculation purposes. Make any necessary amendments.

Click the Reports tab > Benefits by Quarter.

Ensure that you have the same categories (type) of benefits in each quarter. Also ensure that there are benefits added to each quarter. You will easily identify if a quarter is missing data. If that is the case, go back and import the data into that quarter.

Review the attribution

Click the Workpapers tab > Attribution.

When reviewing the quarter 4 calculation, ensure there is a gross cash pay amount for every employee. If there is not, it is likely the data is missing, as it is very unusual for an employee to receive a benefit but not a salary. If the gross cash pay amount is missing, the FBT calculation will be incorrect.

If you have a lot of data, rather than going through every row, click the Gross cash pay column header to sort the employee list by gross cash in ascending order. Any employees with blank or 0 gross cash amounts will display towards the top of the list. Reconcile these records with your source data.

Review the vehicles and drivers

Click the Workpapers tab > Vehicles.

Ensure there is a Schedule 5 amount for each vehicle (unless it has been disregarded). If a Schedule 5 amount is missing, follow this up and resolve the issue.

For example, it is likely that when you first add a vehicle, you select the Cost method and record the cost of the vehicle. From that information, the system automatically calculates the Schedule 5 amount. If you later edited the vehicle to select the Tax book value method, but you do not record the tax book value, the system will be unable to calculate the Schedule 5 amount. The system does not calculate the tax book value automatically – you must tell the system what it is.

Click the Workpapers tab > Vehicle Analysis / Driver Analysis.

Use the Vehicle Analysis and Drivers Analysis reports to identify any items that require attention, such as duplicate drivers and large variances. Follow up and resolve any issues you identify.

Review the sense checks

Click the Workpapers tab > Sense Checks.

The system runs sense checks automatically. If the system identifies any exceptions, click on the sense check to review them.  Make any changes necessary.

Review the tax position

Click the Tax Position tab > Quarter 4 tab.

When preparing the quarter 4 calculation, ensure the Q4 True Up has been completed and verify that the amounts entered match the amounts in the returns you actually filed with the IRD.

Review the provision reports

Click the Reports tab > Cost Centre Reporting / Benefits by Quarter / Benefits by Year.

Use the FBT Provision reports to identify any items that require attention or any unusual variances.

Review the settings

Click the Settings tab > Settings.

The FBT return settings should have been edited at the beginning of the year, to meet the needs of the entity. However, you should review them at the end of the year, to ensure the correct return type and FBT rates are selected.