Help with Tax Benefits of Working in Not For Profit Sector

Discussion in 'Accounting & Tax' started by legallyblonde, 22nd Dec, 2017.

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  1. legallyblonde

    legallyblonde Well-Known Member

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    I have a question for all of the accounts in the room! This is based on a friends current circumstances but is something that I can see working into my future plans when I am semi-retired and working for enjoyment and fulfillment, despite not having a pressing need to work. Whilst I was working casually I had previously considered working in the not for profit sector (NFP) as at the time there were so many part time roles available locally (and I was pretty unhappy in my current role). I didn't apply in the end because at this stage in my life the pay in my current role was too lucrative due to overtime opportunities.

    Anyways, back on track. Friend of mine is a disability support worker with a not for profit organisation. My super basic understanding is that working in health or not for profit organisations has tax benefits such as paying certain bills/expenses in pre-tax dollars, significantly reducing your tax liability (with the theory being this will attract people to low paying roles ect). I had a look on the ATO website and cannot locate many specifics.

    My friend is about to commence self employment but will still work some shifts at the NFP organisation to make full use of the tax benefits.
     
  2. Ross Forrester

    Ross Forrester Perth business advisor and founder Business Member

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    A public benevolent institution provide fringe benefits to its employees free of FBT if the grossed-up taxable value of fringe benefits does not exceed $30,000 per employee.

    NFP’s only do not access this concession. A PBI can be NFP but just being NFP does not make you PBI.
     
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  3. legallyblonde

    legallyblonde Well-Known Member

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    Brilliant! Thank you! That is a very generous threshold!

    PBI classification is certainly more narrow than NFP! I am mostly looking in the conservation and land management space, so it might be a bit less relevant for me!

    Thanks for the speedy very clear reply!
     
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  4. Ed Barton

    Ed Barton Well-Known Member

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    $30k is the grossed up amount using the max personal tax rate. eg the employee can sacrifice around $16k (to be used to pay pre tax for 'bills'). So if someone is earning $76k pa and work for a PBI they can have $16k of bills paid and receive a taxable income of $60k.

    However a lot of extras in the tax and benefits system uses the grossed up figure. So income will be $90k for HECS repayment, family tax benefit, medicare surcharge, family tax welfare, etc.

    Rough figures. DYR
     
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  5. thatbum

    thatbum Well-Known Member

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    @legallyblonde I've worked mostly in PBIs throughout my legal career - so I wouldn't be surprised if you ran into them in your various NGO encounters yourself.

    Its been pretty easy to figure out and take advantage of the salary sacrificing - the coordinator/office manager/payroll person has always been on top it and helped sort it out for employees that were interested in doing it at every place I've worked.
     
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