NFPs Encouraged to Take Part in Fringe Benefits Tax Review

Not for profits are being encouraged to take part in a review examining compliance costs of the Fringe Benefits Tax (FBT), with an aim of reducing the regulatory burden for the social sector.  

The Board of Taxation, an advisory body to the Australian government, is undertaking a review of compliance costs associated with the FBT and exploring opportunities for these costs to be reduced.

The board said they want to hear the not-for-profit sector’s perspective on the issue, and in particular how NFPs manage their obligations and compliance costs, through focus groups, a survey, and case study interviews.

The board member leading the review, Rosheen Garnon, said: “As part of [our] review, we are researching the FBT compliance burden on employers in the not-for-profit sector. We encourage not-for-profit organisations to participate in the research by completing our survey (once it is open) or via participation in a case study.

“This will inform our work and assist us understand the current level of burden on the sector and make recommendations as to how this burden can be reduced.”

Are you a #SmallBiz providing fringe benefits to employees? Participate in a focus group or case study interview on fringe benefits tax compliance costs and help us make recommendations on how costs can be reduced. Please email research@taxboard.gov.au to register your interest. pic.twitter.com/ctufreBo30

— Board of Taxation (@TaxBoard_AU) August 17, 2018

Phil Butler, the NFP sector leader at the Australian Institute of Company Directors (AICD) and a member of the Australian Taxation Office’s Not-for-profit Stewardship Group, encouraged charities NFPs to take part in the review.

“While the FBT regime benefits many employees in the sector, administering FBT concessions can be costly which means that the full benefit is not fully utilised. We would encourage those in the sector to contribute to the review,” Butler told Pro Bono News.

FBT is a tax payable by employers for benefits paid to an employee (or an employee’s associate) in place of salary or wages, separate to income tax and calculated on the taxable value of the fringe benefits provided.

Tim Morris-Smith, a partner at Red Dog Consulting who is also a chartered accountant and former CFO of Mission Australia, told Pro Bono News there were two sides to the review.

“There’s firstly the burden of administrative compliance, but there’s also the benefit that the tax concession provides,” Morris-Smith said.

“So any reform has to consider the benefit of FBT-related concessions to the sector, because it is very valuable for many not for profits.”

Morris-Smith said the administrative costs were relatively significant for the sector, as NFPs were forced to “run around gathering receipts, copies of credit card statements etc.” in relation to the tax concession.

He also encouraged NFPs to take part in the review, but said he hoped the process would not be used “as a mechanism for withdrawing benefits from not for profits”.

“For some NFPs, these FBT benefits are really quite significant to their relationship with employees,” he said.

“And these days when everybody is increasingly being squeezed to do more with less, it would be wonderful to perhaps look at some streamlining and improvements to the administrative processes [with FBT].

“NFPs are in the business of relieving poverty, providing education etc… not on spending money on administrative [tasks] for an antiquated tax system.”

Further information on the review can be found here.