The Law Handbook 2024

Chapter 6.6: Community organisations 619 up clause. PBIs must be registered with the ACNC as a prerequisite for ATO endorsement as a DGR, or to access Fringe Benefits Tax ( FBT ) exemptions and other federal government concessions. For more information, visit www.nfplaw.org.au/tax, or contact the ATO (see ‘Contacts’ at the end of this chapter). Organisations may be eligible for tax concessions under state laws (e.g. on stamp duty, payroll and land tax). For more information about state-based tax concessions, contact the State Revenue Office Victoria (see ‘Contacts’ at the end of this chapter). Fringe Benefits Tax The Fringe Benefits Tax ( FBT ) is a tax an employer pays when it provides a non-salary benefit to its employees. An example is where an employee chooses to have part of their salary paid directly to their rental provider or car loan provider. Community organisations are only liable to pay FBT on benefits provided to employees, employees’ families or other associates. Generally, benefits provided to volunteers or independent contractors are not subject to FBT as they are not considered employees. The FBT is paid by the employer, based on the ‘grossed-up’ value of the non-salary benefits provided to its employees. The FBT rate for the FBT years ending 31March 2021 to 2024 is 47 per cent. FBTmust be recorded on employees’ PAYG payment summaries. There are two main types of FBT concessions provided by the ATO: • FBT rebate; and • FBT exemption. Fringe Benefits Tax rebate The FBT rebate is a rebate on the tax (i.e. a tax discount) that employers pay on non-salary benefits. An organisation qualifies for the FBT rebate if it is a non-government organisation and a: • charity that is an institution (but not a PBI) registered by the ACNC and endorsed by the ATO; • religious institution registered by the ACNC and endorsed by the ATO; • certain type of scientific institution or public educational institution; • trade union or employer association; or • not-for-profit organisation established: – to encourage music, art, literature or science; – for musical purposes; – to encourage or promote a game, sport or animal races; – for community service purposes; – to promote the development of aviation or tourism; – to promote the development of Australian information and communications technology resources; or – to promote the development of the agricultural, pastoral, horticultural, viticultural, aquacultural, fishing, manufacturing or industrial resources of Australia. As at 12 January 2023, employers that are entitled to the fringe benefit rebate can have their FBT liability reduced by a rebate of 47 per cent of the gross FBT payable. The rebate for each employee can be claimed until the total grossed-up taxable value of the fringe benefits provided to an employee exceeds $30,000. Fringe Benefits Tax exemption The FBT exemption is a more extensive tax concession that is available for certain not-for-profit organisations, including PBIs, health promotion charities, public and not-for-profit hospitals, and public ambulance services. The fringe benefit exemption completely exempts employers from having to pay FBT on non- salary benefits up to a certain threshold per employee, and therefore makes it financially viable to offer salary packaging to employees. Eligible not-for-profit organisations are exempt from having to pay FBT until the total grossed-up taxable value of the fringe benefits provided to an employee exceeds $30,000 for PBIs and health promotion charities and $17,000 for hospitals and ambulance services. More information about the FBT is available from the ATO (see ‘Contacts’ at the end of this chapter). Goods and Services Tax Generally, not-for-profit organisations with a turnover of $150,000 or more per year must register for Goods and Services Tax ( GST ). Not-for-profit organisations with a turnover of less than $150,000 per year may choose to voluntarily register for GST. If an organisation is required to register for GST, then it needs to have an ABN. If an organisation is not registered for GST, then it does not collect GST on the sale of goods and