Fringe benefits tax and fundraising
As an NFP organisation, if you employ people you are liable to pay FBT on benefits provided to your employee (or an associate of your employee) as part of their employment. This is regardless of whether they are engaged in fundraising activities as part of their duties. A gift to an employee will generally be considered a fringe benefit, unless it is a minor benefit. Goods donated to you are not subject to FBT, however if you then give the goods to your employee, FBT may apply.
Generally benefits you provide to volunteers do not attract FBT.
It is important, therefore, to determine the status of the people involved in your fundraising activities; many will be volunteers, some will be contractors and some will be employees.
If you provide fringe benefits to your employees or their associates, you may need to register for fringe benefits tax.
Application to register for fringe benefits tax
Example 1 – Reimbursement for purchase
An NFP organisation organises a garage sale, with proceeds going towards the NFP organisation's cause. An employee of the NFP organisation purchases a used jacket for $15. The NFP organisation reimburses the employee for the cost of the purchase. The reimbursement is an expense payment fringe benefit, which could be an exempt benefit.
Example 2 – Discount on fundraising item
A hospital decides to fundraise by selling cookbooks over the Christmas period. The hospital pays $12 for each cookbook, which are sold for $16 each. Employees of the hospital are given the opportunity to purchase a cookbook for $8. This is a property fringe benefit, which could be an exempt benefit.
Example 3 – Gifts to employee and volunteer
A charity provides an employee with a gift voucher worth $50 in appreciation of their work. The charity needs to assess whether the voucher given to the employee is a minor benefit and exempt from FBT.
Example 4 – Gift to volunteer
An NFP organisation provides a volunteer with six bottles of wine, valued at $110. This gift is not subject to FBT as the benefit is provided to a volunteer and not to an employee.
Example 5 – Gifted car used by an employee
An NFP organisation is donated a car with a market value of $12,999. An employee of the NFP organisation's fundraising committee uses the car for the committee's fundraising activities, but is allowed to use the car for their private use on the weekends. The provision of a car for an employee's private use is a car fringe benefit.
End of example
As an NFP organisation, if you employ people you are liable to pay FBT on benefits provided to your employee (or an associate of your employee) as part of their employment. This is regardless of whether they are engaged in fundraising activities as part of their duties.