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Insights

Not-for-Profit Client Alert

Public Benevolent Institutions: time to check your fringe benefit tax endorsement status

| Published by Michael Gorton AM, Jonathan Teh, Solomon Miller

A not-for-profit update

Public benevolent institutions (PBIs) are entitled to fringe benefit tax (FBT) tax concessions, but only if correctly endorsed by the Australian Taxation Office (ATO).

We know of many PBIs recently realising that their FBT endorsement status is incorrectly recorded by the ATO. 

Specifically, a number of PBIs have reported being endorsed for the "FBT Rebate", when they believed they were entitled to be endorsed for the "FBT Exemption".  The FBT Rebate entitles holders to reduce their FBT liability by 48% of their gross FBT payable (up to $30,000), whereas the FBT Exemption entitles PBIs to provide benefits up to $30,000 to employees which are fully exempt from FBT.  The wrong (or no) endorsement might leave your PBI exposed to an unexpected FBT liability.

For example, we have witnessed this problem arising due to the past mistakes of the PBI to apply for the correct FBT exemption status. However, we have also encountered incorrect endorsements due to technical issues at the ATO.

If you operate a PBI, you should check the status of your charity tax endorsements by:

  1. Visiting the Australian Business Register (www.abr.business.gov.au);
  2. Searching for your PBI by name or ABN; and
  3. In the section entitled Charity tax concession status, check whether your PBI is endorsed for the "FBT Exemption" or "FBT Rebate".

If your PBIs recorded endorsements surprise you, a useful starting point will be to locate your original ATO tax endorsement letter.  If you require advice or assistance regarding your PBI or other not-for-profit organisation, please contact Michael Gorton, Solomon Miller or Jonathan Teh.