Fringe Benefits Tax Insights for Non-For-Profit Organisations
Not-for-profit (NFP) organisations can use the Fringe Benefits Tax (FBT) concessions to provide tax advantaged salaries to their employees. The FBT Concessions are essential in allowing NFPs to be able to provide services sustainably.
Some FBT Concessions include:
- Exemption from FBT (subject to a cap) for registered public benevolent and health promotion charities, hospitals, and public ambulance services
- Rebates on FBT subject to a cap of $30,000 for each employee
- Separate capping thresholds for salary packaged meal entertainment up to $5,000
- Exemptions for car parking fringe benefits
- Concessions for remote area housing benefits
Application of FBT Concessions
In order for these Concessions to apply, an NFP that is a charity must be registered with The Australian Charities and Not-for-profits Commission (ACNC) and be endorsed by the Australian Taxation Office (ATO).
There are two categories of NFP organisations that see the benefits of Concessional FBT treatment:
- FBT-exempt employers
- FBT-rebatable employers
Perks of FBT Concessions
As mentioned above, NFPs can use fringe benefits to provide tax advantaged salaries to their employees. As a NFP, it is often challenging to attract top talent, and the FBT Concessions are a way to sweeten the deal.
The employee will only pay income tax on the salary component, which means that for the same cost to your organisation, more money can end up in the pocket of your employees. This can be communicated to potential employees as a talent attraction strategy, as a more attractive salary packaging option.
If you structure your arrangements with your employees well, you can set up a win-win situation.
Commonly Asked Question
A common question we are asked is around timing: if you hire an employee halfway through the year, does the whole cap apply, or only half?
The answer is yes! The whole cap applies.
If you have any questions regarding FBT, we can assist you. To find out more and to ensure you are maximising your FBT Concessions, contact us.