The Government has tonight announced that it will provide transitional grants to assist certain state and territory and local government organisations that have lost their concessional fringe benefits tax (FBT) status following recent court judgments and a review of eligibility by the Australian Tax Office (ATO).
Many of these organisations had previously been endorsed by the Commissioner of Taxation as public benevolent institutions, and could access an FBT exemption of up to $30,000 of grossed-up taxable value per employee. However, they have since been found to be ineligible for this status, as court judgements have confirmed that organisations which are controlled by government do not meet the common law requirements to be a public benevolent institution.
Many of the organisations had passed on the benefits of the FBT exemption to employees through salary sacrifice arrangements. The Government is concerned to ensure that individual employees of these organisations are not disadvantaged by the organisations’ loss of access to the FBT concession. The transitional grants to be provided by the Australian Government will allow employees to renegotiate remuneration arrangements with their employers.
Some of the affected health organisations will be able to access an FBT exemption of up to $17,000 of grossed-up taxable value per employee which is available to public and not-for-profit hospitals. The Australian Government will provide these organisations with grants to assist them with the transition to the lower level of concession. This is in addition to the grants to be provided to those organisations that have lost their concessional FBT status altogether.
The ATO will administer the payment of the transitional grants. The ATO will contact the individual organisations that are eligible for the grants to advise them on the grants process and provide them with further information.
The funding will be provided over the 2004-05 to 2007-08 period.
The Government will also provide a new category of deductible gift recipient, to allow certain special schools to receive tax deductible donations. Some special schools had previously been accessing deductible gift recipient status as public benevolent institutions. The new deductible gift recipient category will ensure that these organisations are eligible to receive tax deductible gifts.