Recent and proposed law changes

In-house fringe benefits

Under the FBT law, there are different types of benefit that may be provided by employers to employees (or their associates) where the employer is in the business of providing the same or similar goods and services to their customers. These benefits are known as in-house benefits. The law allows for such in-house benefits to be concessionally taxed.

Changes have been made to these concessions. Under these changes, the concessions no longer apply to in-house benefits provided under a salary packaging arrangement on or after 22 October 2012. However, transitional rules may apply to arrangements entered into before that date for benefits provided up to 31 March 2014.

Airline transport benefits

Changes have been made to the FBT law relating to airline transport fringe benefits. Under these changes, there is no longer a separate category of fringe benefit for airline transport fringe benefits. Airline transport fringe benefits are now taxed under the in-house benefit provisions – as expense payment, property or residual fringe benefits – and the way the taxable value is calculated has been changed.

The changes affect airline transport fringe benefits provided on or after 7.30pm AEST on 8 May 2012.

As a result of these changes, Item 23 of the return does not include a line relating to airline transport fringe benefits. These fringe benefits are now included under the expense payments, property or residual categories.

 

Not-for-profit reforms

Charities

From 3 December 2012, the Australian Charities and Not-for-profits Commission (ACNC) is the new national regulator of charities.

The ACNC is responsible for registering organisations as charities for all Commonwealth purposes and maintains a public register of charities. The ACNC determines whether an organisation is a particular sub-type of charity, including a public benevolent institution or health promotion charity.

Registration with the ACNC is voluntary – however, charities must be registered with the ACNC if they want our endorsement to access charity tax concessions. These include the:

• FBT rebate for registered charities
• FBT exemption for registered public benevolent institutions or registered health promotion charities.

Charities were automatically registered with the ACNC from 3 December 2012 if they were endorsed by us before that date as:

• income-tax exempt
• FBT exempt as a public benevolent institution or a health promotion charity
• a deductible gift recipient because they are a public benevolent institution or health promotion charity.

Charities that were not endorsed by us as income-tax exempt charities on or after 3 December 2012 must register with the ACNC before we can endorse them to access charity tax concessions – this includes the FBT rebate for registered charities and the FBT exemption for registered public benevolent institutions or registered health promotion charities.

FBT rebate

Changes to the FBT law as a result of the introduction of the ACNC has meant that charitable institutions that are institutions of the Commonwealth, a state or a territory and some charitable funds may be eligible for the FBT rebate for the period 3 December 2012 to 31 March 2013. Transitional provisions mean that such institutions may also be eligible for the FBT rebate for the period 1 April 2013 to 31 March 2014.

Entitlement to the rebate

If…	Then…
Your charity is not registered with the ACNC	It is not entitled to the FBT rebate
Your charity is a registered public benevolent institution or health promotion charity	It is not entitled to the FBT rebate
Your registered charity is not endorsed to access the FBT rebate tax concession and is an institution.	It is not entitled to the FBT rebate.
Your registered charity is not endorsed to access the FBT rebate tax concession and is not an institution.	It is entitled to the FBT rebate from 3 December 2012 to 31 March 2013.
Your registered charity is endorsed to access the FBT rebate tax concession, starting from a date of endorsement that is before 30 June 2013.	It is entitled to the FBT rebate for the periods: from 3 December 2012 (or date of endorsement, whichever is the later) to 31 March 2013 from 1 April 2013 (or date of endorsement, whichever is the later) to 31 March 2014 from 1 April 2014 unless the Commissioner of Taxation revokes the notice of endorsement.
Your registered charity is endorsed to access the FBT rebate tax concession starting from a date of endorsement that is on or after 30 June 2013	It is entitled to the FBT rebate from the commencement date of the endorsement, provided all of the conditions are met.

 

Conditions

For endorsement from 30 June 2013 onwards, your charity must meet all of the following conditions to be entitled to the FBT rebate – it must be:

• a registered charity
• endorsed for the income tax exemption
• an institution
• not a registered public benevolent institution
• not a registered health promotion charity
• not an institution of the Commonwealth, a state or territory
• endorsed for the FBT rebate.

 

Religious institutions

From 3 December 2012, religious institutions, including those that previously self-assessed their income tax exemption, must be registered with the ACNC as a charity (with a purpose that is the advancement of religion) to access relevant FBT concessions.

FBT rebate

Religious institutions are eligible for the FBT rebate – subject to a capping threshold of $30,000. The institution must be registered with the ACNC as a charity and endorsed by us to access the FBT rebate.

FBT exemption

Religious institutions may also be eligible for an FBT exemption for benefits they provide to:

• religious practitioners
• live-in carers
• domestic employees.

The religious institution does not need to be endorsed by us to access this FBT exemption, but it must be registered with the ACNC.

Non-profit companies

Non-profit companies that are charities must be registered with the ACNC as a charity from 3 December 2012 to access the exemption for FBT exempt benefits provided to live-in carers.

 

Future change to rate of tax

From 1 April 2014, the FBT rate of tax will be 47%. The type 1 gross-up rate will change to 2.0802 and the type 2 gross-up rate will be 1.8868.