Public Benevolent Institutions and Salary Packaging

Employees of Public Benevolent Institutions (PBIs) may gain maximum benefit from exemptions from Fringe Benefits Tax (FBT) and from additional Exempt Benefits not available to other employees. This is because the ATO recognises the value of such organisations, and allows them to package fringe benefits to their staff without attracting an FBT liability up to a certain limit. The limit is currently $30,000 grossed up, which means employees may receive about $15,000 in fringe benefits which are not subject to tax. These benefits are deducted from the employee’s contract salary, so their taxable income (and tax) is reduced.

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 PBIs and other 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

Additionally, there is another Exempt Benefit only available to employees of PBIs. This is Meal Entertainment, which includes entertainment by way of food or drink to an employee and associates, and travel and accommodation connected with such entertainment. This can represent a significant benefit to employees of PBIs over and above the capped threshold of Fringe Benefits.

All of these benefits can be flexibly tailored to suit individual employees’ circumstances using the Mistral Salary Packaging program.