Is your NFP organisation an exempt organisation or rebatable employer?
It is crucial to understand the type of employer your NFP organisation is to determine the exemptions or concessions that may be available. Where your NFP organisation does not meet the criteria of an exempt organisation or rebatable employer, the exemptions and concessions in this article will not be available and your NFP organisation will be treated the same as a ‘for-profit’ entity for FBT purposes.
Your NFP organisation qualifies as an exempt organisation if it is a:
public benevolent institution (PBI) (other than a public or not-for-profit hospital) that is registered with the Australian Charities and Not-for-profits Commission (ACNC) and endorsed by the ATO
health promotion charity that is registered with the ACNC and endorsed by the ATO
public or not-for-profit hospital, or
public ambulance service.
NFP organisations that would typically qualify as a rebatable employer include non-government organisations which are a:
charity that is an institution (but not a public benevolent institution) registered with the ANCN and endorsed by the ATO
religious institution registered with 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 racing
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.
What you need to know – the basics
Exempt organisations – capping threshold
The capping threshold for exempt organisations is outlined below:
Organisation |
Capping threshold (Grossed-up taxable value) |
Registered PBIs and health promotion charities |
$30,000 per employee |
Hospitals and ambulance services |
$17,000 per employee |
The exemption applies where the total grossed-up value of the benefits provided to each employee during the FBT year is equal to or less than the capping threshold. FBT will be payable on any portion of the total grossed-up value of fringe benefits provided to an employee that exceeds the capping threshold. The full capping threshold will apply even if the exempt organisation did not employ the employee for the full FBT year.
Rebatable employers – capping threshold
The capping threshold for rebatable employers is outlined below:
FBT year ending |
Rebate % |
Capping threshold (Grossed-up taxable value) |
For the current FBT year ending 31 March 2025 |
47% |
$30,000 |
If the total grossed-up taxable value of fringe benefits provided to an employee is more than the capping threshold, a rebate cannot be claimed for the portion of the FBT liability which exceeds the capping threshold. The full capping threshold applies even if you did not employ the employee for the full FBT year.
Separate cap for salary packaged entertainment benefits
Exempt organisations and rebatable employers can also provide exempt salary-packaged meal entertainment and entertainment facility leasing benefits up to a separate and additional capping threshold (i.e. separate from the capping threshold mentioned above) of $5,000 (grossed-up, per employee, per year).
What you need to know – tips and common errors
Benefits excluded from the capping thresholds
The following benefits are not included in the exempt organisation or rebatable employer capping thresholds:
car parking fringe benefits
meal entertainment (not salary packaged), and
entertainment facility leasing expenses (not salary packaged).
For rebatable employers providing these fringe benefits, the FBT rebate may be claimed on all taxable amounts relating to these fringe benefits and not subject to the capping threshold (noting that an FBT exemption may be available to exclude the fringe benefit from FBT altogether, such as the minor benefit exemption and car parking exemption noted below).
For FBT exempt organisations, the provision of these benefits generally should not give rise to an FBT liability. However, care should be taken to distinguish non-salary packaged meal entertainment expenses and non-salary packaged entertainment facility leasing expenses with other fringe benefits which may not be subject to the same broad FBT exemption. For example, non-salary packaged recreational entertainment (e.g. tickets to a sporting event) is different from non-salary sacrificed meal entertainment and should be appropriately considered for FBT purposes.
Entertainment
Unlike employers which are subject to income tax, entertainment provided by FBT exempt organisations and FBT rebatable employers may be regarded as tax-exempt body entertainment (TEBE) fringe benefits. A TEBE fringe benefit arises where the employer:
is either wholly or partially exempt from income tax, and
would not be entitled to an income tax deduction (in relation to the entertainment expenses) if the employer did pay income tax.
It is important to note that this type of fringe benefit has fewer exemptions than other entertainment fringe benefits. In particular, the minor benefits exemption may be applied but only in limited circumstances. In addition to the general criteria for deciding whether a minor benefit should be treated as an exempt benefit (e.g. the requirement for the benefit to be provided infrequently and irregularly), for tax-exempt bodies the minor benefit exemption is available only if:
the entertainment provided is incidental to the provision of entertainment to outsiders and does not consist of, nor provided in connection with, a meal - other than light refreshments, or
the entertainment is provided on the employer’s business premises solely as a means of recognising the special achievements of the employee in a matter relating to the employment of the employee.
Furthermore, as TEBE fringe benefits are distinguished from property fringe benefits, the exemption for property benefits provided and consumed on business premises would not apply for TEBE fringe benefits.
Where your NFP organisation chooses to value meal entertainment using the 50/50 method, the fringe benefit is not considered as a TEBE but is considered as a ‘meal entertainment fringe benefit’ and disclosed as such in the FBT return.
Reportable fringe benefits amount
If the value of certain fringe benefits provided to an employee exceeds $2,000 in an FBT year, you must record the grossed-up taxable value of those benefits on your employee’s payment summary for the corresponding income year. This requirement applies even if your organisation is an FBT exempt organisation or FBT rebatable employer, and the benefits provided to the employee does not exceed the relevant cap.
Exercising care in relation to the capping threshold
Providing employees of an FBT exempt organisation or an FBT rebatable employer with the option to include fringe benefits in their salary package may be a tax-effective way to maximise the value of the employee’s remuneration. However, where additional benefits are provided by the organisation directly to employees, outside of the salary sacrifice arrangement, such as staff discounts, gift-cards and company owned cars, it is imperative that the organisation maintains a clear policy and review process to ensure that the individual capping thresholds are not exceeded, or otherwise, to ensure any excess is identified and treated correctly in the FBT return.
Other concessions
There may be other specific concessions applicable to your NFP organisation, depending on the circumstances.
There are specific FBT concessions available for:
Religious institutions registered with the ACNC as a charity under the subtype of advancing religion: exemptions are available for certain benefits provided to religious practitioners, and live-in domestic workers
Live-in residential carers: Certain NFP organisations that provide care for elderly or disadvantaged people may be eligible to access FBT exemptions for benefits provided to live-in carers
Car parking: Car parking fringe benefits and car parking expense payment fringe benefits may be exempt when provided by registered charities, certain scientific institutions and public educations institutions, and
Remote area benefits: Certain NFP organisations may be eligible to apply an extended definition of ‘remote’ for housing benefits and certain residential utilities provided to employees
If you have any questions about your FBT obligations, please reach out to your PwC specialist.
Contact us
