FocusOn - Public Benevolent Institutions (PBIs)
PBIs are a special group of charitable institutions organised for the direct relief of poverty, sickness, suffering, distress, misfortune, disability or helplessness. Organisations that are classified as PBIs can access the following tax concessions:
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Income tax exemptions |
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Goods and Services Tax (GST) charity concessions |
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Fringe Benefits Tax (FBT) exemption. |
In order to access the above concessions, PBIs will need to be endorsed by the Taxation Office. The endorsement process is the same as for charities.
The main tax benefit of a PBI is that it is entitled to a FBT exemption.
FBT Exemption
A PBI endorsed by the Taxation Office is exempt from paying FBT on fringe benefits provided to employees where the grossed-up value of the benefits for a FBT year does not exceed $30,000 per employee.
The only other charities that can access this concession are health promotion charities.
Charitable institutions other than PBIs and health promotion charities cannot be exempt from FBT. However, they may be eligible for a FBT rebate which effectively gives the organisation a 48% rebate on its FBT liability for benefits of up to $30,000 per employee.
What is a PBI?
In order to be classified as a PBI, your organisation needs to meet the following criteria:
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It is a non-profit institution |
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Its dominant purpose is to provide benevolent relief |
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It is set up to meet needs that require benevolent relief |
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It directly provides services to relieve the needs of those suffering and |
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It is for the public benefit. |
Note that in order to be classified as a PBI an organisation needs to be providing services directly to persons in need of relief. Further, the ‘need’ must be a need that requires benevolent relief. ‘Needs requiring benevolent relief’ are conditions or misfortunes such as sickness, poverty, suffering, distress, misfortune, disability or helplessness that arouses pity and compassion in the community.
For example, charities providing childcare services are not PBIs because the services provided do not meet the needs that arouse pity and compassion in the community.
However, organisations providing counselling services to alcoholics would meet this criterion.
A church is generally not a PBI because its dominant purpose is to advance a religion, although it may in the course of pursuing its objectives provide services directly to those in need of relief. For example a church may be operating a soup kitchen to provide food to the poor or it may offer housing to the homeless.
An organisation that exists to promote or educate the public on social welfare is not a PBI as it lacks the direct relief of needs.
It is important to note that a charitable fund cannot be a PBI because it does not itself carry on charitable activities of providing direct services to relieve those in need. It simply manages trust property and makes distributions to other entities to achieve its charitable purpose.
A charitable institution will need to consider all these issues, especially when drafting up its constituent documents, in order to determine whether or not it is a PBI.
Is a PBI a deductible gift recipient?
Being a PBI does not automatically make the organisation a Deductible Gift Recipient (DGR). However, if the PBI meets the criteria of:
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In Australia |
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Preparing the receipts in the required form, and |
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Conducting self-review in respect of its continued eligibility to be a DGR, |
it can apply to be endorsed as a DGR. For more information on becoming a DGR please refer to our FocusOn Deductible Gift Recipients.
How can we help?
Saward Dawson can help with your organisation’s application to be endorsed for income tax exemption as well as to access the other charity tax concessions. We can give advice in regards to whether your organisation meets the PBI criteria.
We can also assist with the application to be endorsed as a DGR.
Published : April 2010