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Tuesday, 12 May 2009
Page: 3576

Mr Oakeshott asked the Treasurer, in writing, on 12 February 2009:

Does the Government recognise the low salary and wage conditions in the not for profit and charitable sectors; if so, does it recognise the importance and value of salary packaging and sacrificing and fringe benefits tax rules on motor vehicles as necessary creative answers to attract talent in these comparatively low paid sectors.

Mr Swan (Treasurer) —The answer to the honourable member’s question is as follows:

(1)   The Government recognises the valuable role played by the not-for-profit sector and the importance of tax concessions to this sector.

(2)   Fringe benefits tax (FBT) plays an important role in maintaining the fairness and integrity of Australia’s taxation system. It places employees with access to fringe benefits on a more even footing with employees whose remuneration consists entirely of salary or wages. The introduction of FBT was designed to remove a serious gap in the income tax law and ensure that all forms of remuneration paid to employees bear a fair measure of tax. The FBT system also facilitates including fringe benefits in an employee’s income for means testing benefits such as family tax benefit, ensuring that families are treated equally. The Government provides FBT concessions to assist not-for-profit organisations to undertake their work. Public benevolent institutions, public hospitals, ambulance services and health promotion charities are provided with a capped exemption from FBT in recognition of the special nature of those organisations. A number of other non-government, not-for-profit organisations that are eligible for a capped rebate of 48 percent of the amount of FBT that would otherwise be payable. The rebate is available to not-for-profit employers who are unable to claim FBT as a tax deduction. Organisations that qualify for this rebate include certain religious, educational, scientific or public educational institutions. The concessional fringe benefits tax valuation of some motor vehicles benefits is not directed at assisting not-for-profit organisations undertake their activities. The valuation methodology was introduced as part of the original FBT legislation with the aim of minimising compliance costs for all businesses. I note that the tax treatment of the not-for-profit sector falls within the scope of Australia’s Future Tax System Review. The review’s consultation paper, issued in December 2008, discusses, amongst other matters, the FBT concessions available to the not-for-profit sector and the valuation of motor vehicle benefits.