Tax landscape

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• Fringe benefits tax
• FBT concessions for not-for-profit organisations
• Reporting obligations
• Common questions about FBT

Fringe benefits tax

Fringe benefits tax (FBT) is a tax paid by an employer on certain benefits provided to an employee or an employee’s associate, such as a family member. It is separate from income tax.

A fringe benefit is generally a benefit provided to an employee in a form other than salary or wages. Examples include allowing an employee to use a work car for private purposes, paying an employee’s private expenses or providing a low-interest loan.

For FBT purposes, an employee may include a:

• current, future or former employee, or
• director of a company

The FBT year runs from 1 April to 31 March. The FBT rate is 47% for the FBT years ending 31 March 2023 to 31 March 2027. FBT is calculated by reference to the taxable value of the fringe benefits provided.

Not every benefit provided to an employee is subject to FBT. Some exemptions and concessions apply to employers generally, including exemptions for eligible work-related items and minor benefits. These general exemptions and concessions should be considered before applying the concessions that are specific to not-for-profit organisations.

No FBT is payable on certain work-related benefits that are used mainly in an employee's employment such as electronic devices, software or protective clothing. Some minor under $300 are also exempt (for example, if an employer provides an employee with flowers on their birthday). Organisations should check the eligibility requirements that apply to the particular benefit.

FTB concessions for not-for-profit organisations

Some not-for-profit employers may qualify for:

• an FBT rebate
• an FBT exemption, or
• another exemption applying to a particular organisation or type of benefit

The FBT rebate and exemption reduce the FBT that an eligible organisation would otherwise pay, but they operate differently and are available to different categories of organisations

FBT rebate

An FBT rebate is available to organisations that qualify as rebatable employers.

Rebatable employers include certain:

• charities that are institutions, other than public benevolent institutions (PBIs) and health promotion charities (HPCs)
• religious institutions
• scientific or public educational institutions
• trade unions and employer associations
• income tax exempt not-for-profit organisations established for specified purposes, including community service, music, art, literature, science, sport or animal racing, and
• income tax exempt not-for-profit organisations established to promote the development of specified Australian industries or resources

Additional eligibility requirements apply. For example, a charity must generally be registered with the Australian Charities and Not-for-profits Commission (ACNC) and endorsed by the Australian Taxation Office (ATO) to access the rebate.

The rebate is 47% of the gross FBT payable, subject to a capping threshold. It applies to the first $30,000 of the grossed-up taxable value of benefits provided to each employee. The rebate does not apply to the amount above the threshold.

The rebate reduces the organisation’s FBT liability. It does not provide a complete exemption from FBT.

FBT exemption

An FBT exemption, subject to a capping threshold, is available to:

• PBIs registered with the ACNC and endorsed by the ATO
• HPCs registered with the ACNC and endorsed by the ATO
• public hospitals
• not-for-profit hospitals, and
• public ambulance services

The capping threshold is:

• $30,000 for PBIs and HPCs, and
• $17,000 for public and not-for-profit hospitals and public ambulance services

The thresholds apply to the grossed-up taxable value of benefits provided to each employee during the FBT year. The thresholds are not necessarily the same as the amount of expenses an employee can salary package.

If the grossed-up taxable value of the relevant benefits provided to an employee is within the applicable threshold, those benefits are exempt from FBT. If the threshold is exceeded, the organisation must calculate and pay FBT on the excess.

Some benefits are not counted towards the capping thresholds. Check the ATO’s current guidance to determine how the threshold applies to a particular benefit.

A separate exemption for eligible car parking benefits may also be available to registered charities.

Other FBT exemptions

Other exemptions may be available to particular not-for-profit organisations or for particular benefits. These include certain exemptions for:

• benefits provided by religious institutions to religious practitioners
• benefits provided to some live-in carers, and
• eligible work-related items and minor benefits

The eligibility requirements for the particular exemption must be satisfied.

Key differences between the FBT exemption and rebate

An FBT exemption means an eligible organisation does not pay FBT on eligible benefits up to the applicable capping threshold.

An FBT rebate reduces the FBT payable by an eligible rebatable employer. It does not remove the FBT liability completely.

Different categories of organisations qualify for each concession:

• the capped exemption is generally available to eligible PBIs, HPCs, public and not-for-profit hospitals, and public ambulance services
• the rebate is available to certain charities and other specified non-government not-for-profit organisations that qualify as rebatable employers

The applicable capping threshold is:

• $30,000 for PBIs, HPCs and rebatable employers, and
• $17,000 for public and not-for-profit hospitals and public ambulance services

The thresholds are based on the grossed-up taxable value of benefits provided to each employee during the FBT year.

Reporting obligations 

Employer FBT obligations

An employer may need to register for FBT, lodge an FBT return and pay FBT if its FBT liability is not fully covered by an exemption or rebate.

If an FBT-exempt organisation provides benefits to an employee that exceed the applicable exemption threshold, the organisation must calculate and pay FBT on the excess. It must also report details of fringe benefits provided to all employees, not only the employee whose benefits exceeded the threshold.

The reporting requirements depend on the organisation’s circumstances and the benefits provided. Organisations should check the current ATO requirements or seek professional advice.

Employee income statements

If the total taxable value of reportable fringe benefits provided to an employee is more than $2,000 in an FBT year, the employer must generally report the grossed-up value on the employee’s income statement or payment summary.

A reportable fringe benefits amount is not included in the employee’s taxable income. However, it may be taken into account for some income tests and government payments and obligations. These may include:

• study and training loan repayments
• child support
• means-tested government benefits
• the Medicare levy surcharge, and
• superannuation co-contributions

Common questions about FBT

What is salary packaging for charities?

Salary packaging is an arrangement under which an employee receives part of their remuneration as benefits rather than salary or wages. For example, the employer may pay or reimburse certain expenses of the employee.

Some charities can provide eligible benefits under an FBT exemption or rebate. The FBT treatment depends on the charity’s status and the type and value of the benefits provided.

Employees should also consider whether reportable fringe benefits could affect income tests and government payments or obligations.

For more guidance, see FBT concessions for not-for-profits and Employee income statements above.

Which not-for-profits get an FBT exemption?

A capped FBT exemption is available to eligible PBIs, HPCs, public and not-for-profit hospitals, and public ambulance services. PBIs and HPCs must be registered with the ACNC and endorsed by the ATO for the exemption.

Other not-for-profit organisations may qualify for an FBT rebate or another exemption applying to a particular organisation or type of benefit.

For more guidance, see FBT exemption, FBT rebate and Other FBT exemptions above.

What are the FBT capping thresholds?

For the FBT years ending 31 March 2023 to 31 March 2027, the general capping thresholds are:

• $30,000 for PBIs, HPCs and rebatable employers
• $17,000 for public and not-for-profit hospitals and public ambulance services, and
• $5,000 for eligible meal entertainment and entertainment facility leasing expense benefits

The thresholds are based on the grossed-up taxable value of benefits provided to each employee. They are not necessarily the same as the amount of expenses an employee can salary package. Different rules apply to the $5,000 threshold.

Check the ATO’s current FBT rates and thresholds before relying on these figures.

What is the difference between an FBT rebate and exemption?

An FBT exemption means an eligible organisation does not pay FBT on eligible benefits up to the applicable capping threshold. An FBT rebate reduces the FBT an eligible organisation would otherwise pay.

Different categories of not-for-profit organisations qualify for each concession. The exemption is generally available to eligible PBIs, HPCs, public and not-for-profit hospitals, and public ambulance services. The rebate is available to certain charities and other organisations that qualify as rebatable employers.

For more guidance, see Key differences between the FBT exemption and rebate above.

The content on this webpage was last updated in September 2026 and is not legal advice. See full disclaimer and copyright notice.

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