Fringe benefits tax - Tax basics for non-profit organisations

What is a fringe benefit?

A fringe benefit is a payment to an employee, but in a different form to salary or wages. Benefits may include rights, privileges or services. For example, a fringe benefit may be provided when an employer:

• allows an employee to use a work car for private purposes
• gives an employee a cheap loan
• pays an employee's private health insurance costs.

Some employers, including charities, will need to distinguish between employees, volunteers and independent contractors. For the purposes of FBT, an employee is a person who receives (or is entitled to receive) salary or wages, or a benefit that has been provided in respect of their employment. A volunteer is not paid for work. Reimbursing a volunteer for out-of-pocket expenses does not cause them to become an employee. Generally, benefits provided to volunteers do not attract FBT.

If an organisation provides non-cash benefits to workers in lieu of salary or wages, FBT can apply.

For more information about FBT, refer to: Fringe benefits tax - a guide for employers Volunteers and tax (NAT 4612).