Fringe Benefits Tax : Status of a Public Benevolent Institution Health Care Provider for Fringe Benefits Tax (FBT) purposes.

Whether the employer which is a Public Benevolent Institution (PBI) but also provides a range of health services including acute and aged care facilities is entitled to an exemption cap of $30,000 grossed up taxable value per employee per annum as from 1 April 2001.

No. The employer is considered to be a hospital for the purposes of paragraph 57A(2)(b) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA). The employer is therefore entitled to an exemption cap of only $17,000 grossed up taxable value per employee per annum as from 1 April 2000 as outlined in step 2 of subsection 5B(1E) of the FBTAA.

The employer is member of a health care group in regional Australia, and provides a range of services, including hospitals and aged care facilities.

The ATO position on this issue is outlined in Practice Statement PS 2001/9. Where an employer is a hospital as per the definition outlined in that practice statement, the previously available exemption for FBT is limited to a cap of $17,000 grossed up taxable value per employee as from 1 April 2000. If the employer does not meet the definition of a hospital, and has public benevolent institution status, the previously available exemption for FBT is limited to a cap of $30,000 grossed up taxable value per employee per annum from 1 April 2001.

By examining a range of indicators, including the level of income received for acute care, the number of beds allocated for acute care, the expenditure allocated to the provision of acute care, and various other facts and factors, it was concluded that the employer satisfied the definition of a hospital as outlined in Practice Statement PS 2001/9. Therefore the exemption capping entitlement is only limited to $17,000 grossed up taxable value per employee per annum as from 1 April 2000.