Can my organisation offer salary packaging?

Charities with Public Benevolent Institution (PBI) or Health Promotion Charity (HPC) status are eligible to salary package.

When your charity is registered with the Australian Charities and Not-for-profits Commission (ACNC), it is registered with at least one ‘subtype’ that reflects your charitable purpose. Charities with the PBI and HPC subtype are eligible to receive an exemption for fringe benefits tax (FBT) and provide their employees with benefits which are FBT-free, subject to a capped limit. These benefits include salary packaging.

We recommend that organisations seeking to change their charity subtype review the information available from the ACNC website or access professional advice.

Public Benevolent Institution (PBI) status

The ACNC defines a PBI as “a charitable institution whose main purpose is to relieve poverty or distress.”

In order to register as a PBI, your organisation must:

  • Meet the legal definition of a charity
  • Be an institution – for example, you must be an organisation or association that delivers your own activities, engages others to deliver activities on your behalf or delivers activities in partnership with others.
  • Have a main purpose of benevolent relief, such as working to relieve poverty or distress. The need you are trying to meet must be more than people experience ordinarily, and signicant enough that it would arouse compassion from people within the community.

For organisations that provide support through funding, rather than direct activities, you will need to demonstrate that your activities are focussed on relieving the poverty or distress of people in need.

Your constitution describes your organisation’s purpose or objective, so it is key for determining your PBI status.

Health Promotion Charity (HPC) status

The ACNC defines a HPC as “a charitable institution whose principal activity is to promote the prevention or the control of diseases in human beings.”

In order to register as an HPC, your organisation must:

  • Meet the legal definition of a charity
  • Be an institution – for example, you must be an organisation or association that delivers your own activities, engages others to deliver activities on your behalf or delivers activities in partnership with others.
  • Actively promote the prevention or control (or both) of disease in human beings. A general approach to improving health or wellbeing is not sufcient. The definition of disease covers both physical and mental illnesses. There are specic requirements relating to the definition of disease on the ACNC website.
  • Have health promotion as its principal activity.

Applying for PBI or HPC status

The ACNC is responsible for determining your charity’s subtype. You can apply for a PBI or HPC subtype via an online form on the ACNC Charity Portal. Before applying, we recommend that you review the ACNC guidance on the subtype you’re applying for, and check your constitution and activities. You may need to amend your constitution to demonstrate that you are a PBI or HPC. Seek legal advice if there are any areas that are unclear.

Once you have PBI or HPC status, the ATO will accept the ACNC registration of your organisation’s subtype, making you eligible for relevant tax concessions. CBB can then assist with setting up salary packaging for your staff.

Want to know more?

Contact us on:
Email: customercare@cbb.com.au
Phone: 1300 763 505