Charities (including schools and churches) and Salary Packaging

(Section 65J) Rebatable employers are certain non-government, non-profit organisations that are eligible for a rebate of 48% of the amount of FBT that would otherwise be payable.

Organisations that qualify for this rebate include:

• certain religious, educational, charitable, scientific or public educational institutions
• trade unions and employer associations
• non-profit organisations established for the encouragement of music, art, literature or science
• non-profit organisations established for the encouragement or promotion of a game, sport or animal races
• non-profit organisations established for community service purposes
• non-profit organisations established for the purpose of promoting the development of certain resources in Australia, including information and communications technology resources.

Employees of such rebatable organisations may gain benefit from a reduction in the value of Fringe Benefits Tax (FBT) on salary-sacrificed fringe benefits and exempt benefits. These benefits are deducted from the employees’ contract salaries, so that their taxable income (and tax) is reduced.

Fringe Benefits may be provided on the basis of no net cost to the employer, which means that the employee would agree to pay the employer the value of the FBT from before-tax salary, provided this benefited the employee.

The types of Fringe Benefits available include:

• Mortgage and personal loan repayments
• Line of Credit repayments
• Credit card repayments
• Private expense reimbursements
• Meal Entertainment expenses
• Health fund premiums
• Private use of a motor vehicle owned or leased by the employer

There is also a variety of Exempt Benefits available to employees of rebatable organisations who participate in a Salary Packaging arrangement. These exempt benefits generally include items associated with work, and other items generally deemed to be work-related. They can include:

·        A laptop or notebook computer (one per employee per year)

·        An item of computer software for use in the employee’s employment

·        A brief case

·        A calculator

·        An electronic diary or similar

·        A mobile phone required for work contact

·        Protective clothing related to work

·        Tools of trade

All of these benefits can be flexibly tailored to suit individual employees’ circumstances using the Mistral Salary Packaging program. Of particular benefit is the ability to model different packages to see the net benefits to employees, and to determine the optimum mix of cash salary and fringe and exempt benefits. A mechanism is available to limit the percentage of salary that may be sacrificed to fringe and exempt benefits.