The Housing Connection currently has access to Fringe Benefits Tax (FBT) exemptions and Meals & Entertainment Fringe Benefits due to its taxation status as a ‘public benevolent institution’. This status enables The Housing Connection to offer all team members additional financial benefits through ‘salary packaging’. Salary packaging enables staff to take a percentage of their earnings as a non-taxable component by one or more of the following methods:
- Having a proportion of pre tax wages redirected to a Bendigo Bank b-packaged card or a mortgage or rent account, and/or
- Having a proportion of pre tax wages redirected to a meals & entertainment card with Beyond Bank.
Notification of changes to Fringe Benefits Exemption
With one month’s notice, changes to the salary-packing component may be altered or terminated according to changes in Fringe Benefits Legislation or personal taxation arrangements as advised by THC’s Finance Manager. Salary packing is offered on the basis that The Housing Connection does not incur additional liabilities as a result of Fringe Benefits Exemptions. Legislative changes that are retrospectively implemented may require alteration to the salary-packaging component in accordance with Fringe Benefits and Taxation requirements. Where this situation arises, staff members will be advised of any necessary adjustments and will be encouraged to seek independent advice .
Individual staff members are encouraged to seek the advice of an independent accountant in nominating a preferred amount of wages for fringe benefits and the procedure for claiming Fringe Benefits exemption. Independent advice is recommended to take account of individual circumstances and in examining in detail the financial benefits available. The Housing Connection will endeavour to keep staff members up to date of any relevant information from the Australian Taxation Office or other sources, which may affect Fringe Benefits Exemptions, according to the legislation.
Meals and Entertainment Card
THC is a company with PBI (Public Benevolent Institution) status and is tax exempt for FBT purposes. One of the benefits of a PBI is to allow its employees to make a tax free deduction from their gross salary by enrolling in a Meal and Entertainment card. As the name suggests, the card can only be used for meals and entertainment at restaurants, cafes, bistro where you dine in and where the card is accepted. However, it is generally not accepted for take away meals (“sustenance” per ATO), coffees, refreshments, bottle shop (not meals), movies, concerts, and theme park etc., or supermarket purchases. Retail purchases are not allowed.
It works like a Visa debit card, you nominate a fixed amount (e.g. $100 per fortnight) to be deducted from your fortnightly salary, thus reducing your taxable income andtherefore tax payable. This amount will then be deposited to your Meal and Entertainment Visa debit card provided by Beyond Bank. It is acceptable for you to pay for a relative or a friend but they cannot reimburse you as this is a breach of the Tax Act.
Reportable Fringe Benefits
An FBT amount must be reported on an employee’s payment summary at June 30. The benefits will need to be measured over the FBT year (1 April to 31 March).
The benefit reported on the payment summary must be grossed up. Grossing-up reflects the gross salary that would have to be earned to purchase the benefit from after-tax dollars. For the FBT year ending 31 March 2019 the gross-up rate for reporting on employees’ payment summaries is 1.8868. The amount reported on the payment summaries is not included in your assessable income. It is, however, included in a number of income tests relating to certain government benefits and obligations. For further information and updates please visit www.ato.gov.au