Public
Benevolent Institutions |
The
Employee Benefits Card is designed for use by employees of Public
Benevolent Institutions (otherwise known as PBI's). PBI's have
been given special taxation exemptions that allow them to provide
their employees with tax free benefits up to a specified amount.
The Employee Benefits Card makes the delivery of tax free benefits
to employees a simple procedure.
On July 1, 2000 the Australian Government
introduced legislation to improve the equity of the tax system
while recognising the special needs of PBI’s who provide
their employees with fringe benefits. The legislation formalised
the amount of FBT-free fringe benefits that may be provided
to employees of PBI’s by introducing capped thresholds
for FBT exemption. The legislation provided the exemption for
two groups of employers, namely;
- Private Not-for-Profit and Public Hospitals
- Public Benevolent Institutions (other than
Hospitals)
|
Not-for-Profit
Organisation |
Many
organisations provide a public service and are classified as
a PBI because they are 'Not for profit' organisations. Included
in this category are Aged Care providers, not-for-profit hospitals,
charities and a number of organisations that have been granted
a PBI status by the Australian Taxation Office. |
PBI
Exemption Cap |
There
are two levels of FBT exemption for PBI’s:
- $17,000 (grossed-up taxable value) for
Private Not-for-Profit and Public Hospitals
- $30,000 (grossed-up taxable value) for
Public Benevolent Institutions (other than Hospitals)
|
Gross-up
Factor |
Where
an employer provides a benefit to or reimburses an expense incurred
by an employee, the employer must determine if that expense is
a Type 1 or Type 2 benefit and use the appropriate gross-up factor
for tax reporting purposes. The gross-up factor is determined
by whether the benefit is an item that is or is not subject to
GST.
- Type 1 benefits entitle the benefit provider
to claim GST input tax credits and are grossed-up by 2.1292.
- Type 2 benefits do not entitle the benefit
provider to claim GST input tax credits and are grossed-up
by 1.9417.
|
Tax
Free Spending Limit |
Employees
of organisations with a PBI status are able to spend up to a
specified amount tax free every FBT year. This amount is over
and above the tax free threshold enjoyed by all other taxpayers.
The tax free limit of spending on an Employee
Benefits Card is;
- $8,750 per FBT years for employees of Private
Not-for-Profit and Public Hospitals
- $15,450 per FBT years for employees of Public
Benevolent Institutions (other than Hospitals)
|
FBT
Year |
The
FBT Year commences on April 1st and end on March 31st |
Type
1 Benefit |
Type
1 benefits entitles the benefit provider to claim GST input tax
credits |
Type
2 Benefit |
Type
1 benefits entitles the benefit provider to claim GST input tax
credits |
Fringe
Benefits Tax |
Fringe
Benefits Tax (otherwise known as FBT) was introduced in 1986
as a means of taxing benefits provided to employees by their
employer. The taxation applicable depends upon the type of benefit
provided and the taxation status of the employer. Employers who
are PBI's do not have to pay this tax on benefits provided to
employees until the benefits exceed the Cap's as explained above. |
