Navigating FBT compliance and investment management for NFPs

2025 FBT year updates

The 2025 FBT year is the final year the FBT for electric vehicles – plug-in hybrids are available, this will cease effective 1 April 2025. There are exceptions where plug-in hybrid vehicles remain exempt for the 2026 FBT year onwards:

• The plug-in hybrid vehicle was used or available for use before 1 April 2025. Unforeseen circumstances, including delivery delays, have no discretion to extend the date
• There is a financially binding commitment to continue providing the use, or availability for use, of the car for private purposes on and after 1 April 2025.

Changes to pre-existing commitments on or after 1 April 2025 will mean the FBT exemption for the plug-in hybrid electric vehicles will no longer apply.

The 2025 FBT year will be the first year that you can use alternative record keeping, business records, in place of employee declarations for select fringe benefits. Legislative instruments that cover certain benefits and contain conditions will need to be considered, and all relevant information is required before the due date for lodgement of the FBT return. The standard employee declaration forms can continue to be used as per prior periods.

There is no change to the FBT rate for the 2025 FBT year, remaining at 47 per cent. The benchmark interest rate has increased to 8.77 per cent for the 2025 FBT year, and the FBT rebate remains at 47 per cent. For FBT returns lodged by individuals or employers, not a tax agent, 21 May 2025 is the lodgement due date. Lodgements completed by an appointed tax agent have an extended due date of 25 June 2025 when lodged electronically. For the FBT 2025 year, lodgement and payment dates are now aligned.

Considerations for NFPs

FBT exemption capping thresholds have not been indexed for over a decade, with this the value of these concessions does erode year to year. These thresholds make it difficult for NFPs to compete with the private sector when looking to attract skilled talent.

Rebatable employers and NFPs with no concessional status (neither rebatable nor exempt for FBT purposes) face complexities around entertainment expenses. Tax-exempt organisations incur a special category of entertainment called tax-exempt body entertainment, where different rules calculate FBT where entertainment is provided, leading to limited use of the minor benefit exemption. Organisations that are fully exempt or have meal entertainment with no capping thresholds, may still have recreational entertainment that will impact them for the use of the minor benefit exemption.

Franking credits

NFPs making investments that generate franking credits, may be eligible to claim a refund for the generated franking credits.

There are two main areas of investment where this can apply, the first is a direct investment into organisations that are providing a dividend return on the investment. The second is indirect, through an investment in a trust, and the trust itself is generating franking credits. To obtain the refund, you need to meet the eligibility requirements, these include being an ACNC registered charity entity, be endorsed for the income tax exemption via the ATO and maintain a physical presence in Australia, and that the expenditure is incurred and the objects are pursued principally in Australia to meet residency requirements.

Once eligible, applications occur on a financial year basis with an application form via the ATO website that can be submitted.

Investment management for NFPs

Our approach to an NFPs investment strategy includes five key steps to ensure we’re establishing the right strategies and objectives.

• Step one: Objective
• Step two: Governance
• Step three: Administration & analysis
• Step four: Implementation
• Step five: Ongoing review & monitoring.

Overall, our approach to investment management for NFPs is to build a strong investment governance structure and ensure assets that match your broader NFP goals and objectives are chosen.

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