Fringe benefits tax (FBT) and entertainment for non-profit organisations
This guide helps non-profit organisations who are either wholly exempt from income tax or partially exempt from income tax to understand how fringe benefits tax (FBT) and entertainment works and to decide whether or not they may have to pay FBT.
If your organisation pays income tax, please refer to our web guide fringe benefits tax and entertainment for small business for assistance with the FBT treatment of entertainment.
You should use this guide if you are involved in the administration of fringe benefits tax (FBT) for a non-profit organisation. The tables and examples in this guide should provide assistance to non-profit organisations who provide their employees with food and drink, or leisure activities. Depending on the circumstances their provision may be classified as entertainment and possibly incur an FBT liability.
Although we generally refer to fringe benefits provided to employees by an employer, please note that fringe benefits can also be provided to employees' associates (such as a family member). Further, fringe benefits can also be provided by an associate of the employer or a third party by arrangement with the employer.
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In this publication, we help you to:
- identify when an event is likely to be classified as entertainment
- decide whether your organisation has an FBT liability
- calculate the taxable value of entertainment benefits using the actual method, and
- keep records so that you can calculate your organisation's FBT payable.
- explain how you can reduce your organisation's FBT liability, possibly to nil, and
- provide some examples of common situations in which entertainment is provided by non-profit organisations.
The FBT treatment of providing entertainment to employees (and their associates) of tax-exempt organisations is different to those of income tax paying organisations. There are different rules for tax-exempt organisations when it comes to the provision of entertainment because they do not pay income tax.
Your organisation is a tax-exempt body if your organisation's income is either:
- wholly exempt from income tax, or
- partially exempt from income tax (for example a club that earns income from both members and non-members).
For more information about other types of benefits, please refer to Fringe benefits tax - a guide for employers (NAT 1054)