![]() The Draft Ruling is intended to supersede and clarify a number of historical positions adopted by the ATO regarding deductible travel. The ATO's Draft Taxation Ruling (TR) 2017/D6 provides guidance on when an employee's travel expenses are deductible. With both Treasury and the Australian Taxation Office (ATO) focused on work-related deductions, NFPs should be mindful of the proposed changes and commentary in structuring director agreements. With some consideration and planning, NFPs may be able to effectively structure the engagement of their directors to compensate the directors for costs incurred without giving rise to additional FBT, or to enable the director to claim an income tax deduction for costs incurred. The following considers an NFP covering travel expenses as an example of how an NFP may effectively compensate volunteer directors for out-of-pocket expenses. Paid directors are generally subject to FBT, whereas benefits provided to volunteers are generally outside the FBT regime. ![]() Where an NFP reimburses or pays a travel allowance, fringe benefits tax (FBT) may apply, depending on whether the director is considered an employee under the FBT rules. It is crucial to find a balance between recognising and compensating volunteers for the costs they incur in providing their services, and minimising costs to the NFP.įor example, directors may incur travel expenses in carrying out their duties, including transport, accommodation, meals and incidentals. While board members may not expect to receive payment for their services, the absence of reimbursement for incidental expenses can leave board members unduly out of pocket. Now, however, as more industry and technical professionals seek to give something back to their communities, more are signing up to join NFP boards, usually on a voluntary basis. Historically, it was more difficult for boards to attract and retain qualified board members. Many NFP boards have set out to attract not only industry professionals but also legal, tax and media specialists to assist them in achieving their aims while minimising risk. Observers of not-for-profit (NFP) boards will have noticed a renewed focus recently on skills diversity.
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