The Fringe Benefits Tax (FBT)

FBT is paid on certain benefits employers that provide to their employees or their employees' associates.  Did you know that Entertainment can be considered a fringe benefit?

According to legislation the provision of entertainment can be by way of food, drink or recreation and includes accommodation or travel in connection with such. This includes amusement activities, sporting events and similar leisure pursuits.

How to identify whether the provision of food or drink is entertainment?

You will need to examine the circumstances surrounding the provision of the food and drink.  All of the following factors are considered relevant:

• Why the food or drink is being provided?
  This is the purpose test.  Is the food and drink for refreshment purposes or for the purpose of the employee to enjoy themselves?
  
  
• What food and drink is being provided?
  Generally morning and afternoon teas or a light lunch is not considered entertainment.  However the more elaborate the meal the more likely entertainment arises.
  
  
• When is the food or drink being provided?
  Food or drink provided during work hours, during overtime or when an employee is traveling is less likely to be considered as entertainment.
  
  
• Where is the food or drink being provided?
  Food or drink provided on the employer’s premises is less likely to have the character of entertainment.

The golden rule is “where there is alcohol or fun involved the expenditure is more likely to be entertainment”.

For further information visit Fringe benefits tax and entertainment - a guide for employers or contact Sullivan Dewing on 9526 1211.