New FBT Rules
19 February 2001 at 12:02 pm
From 1 April 2001 there will be a ‘cap’ on the level of fringe benefits for which public benevolent institutions and charities can receive concessional FBT treatment.
Kathy Quigley from the Australian Tax Office says these groups will still be able to provide benefits with a grossed-up taxable value of up to $30,000 to any employee without paying FBT.
However, she says from 1 April 2001, they will pay Fringe Benefit Tax at the normal rate on any benefits over this limit.
Workers in other fields pay income tax on cash salary and have FBT paid by their employer on the value of their benefits. This means that the whole of the remuneration package is taxed in some way.
Kathy Quigley says charity workers also pay income tax on their cash salary however at present no FBT is paid on the value of any benefits they receive.
She says this means some employees are getting a significant amount of salary without any tax (income tax or FBT) being contributed to the Australian community.
Quigley says the new arrangements still allow charities to provide a reasonable level of benefits to employees without paying Fringe Benefits Tax.
She says the Government’s capping of the FBT exemption is designed to prevent overuse of the concession while still recognising the special position held by charities.
Only organisations recognised as public benevolent institutions are entitled to receive the concessional treatment for paying FBT.
If you are unsure whether your organisation is recognised as a PBI call the Tax Reform Infoline for Business on 13 24 78 (toll free). As well the FBT Law Interpretation Information Line is 13 33 28 (toll free). For the Australian Tax Office Internet site go to www.ato.gov.au
National Tax Manager, a plain English tax information and training specialist, is offering two solutions to assist you with FBT and salary packaging – the FBT Organiser and Salary Packaging Planner. NTM are also offering FBT Workshops. For further information and an application form email firstname.lastname@example.org quoting FBT in the subject header.