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Entertainment
This is one of the most complex areas of tax law. Depending on the type of entertainment provided and the circumstances in which the benefit was provided, entertainment could be included in a number of fringe benefit types. However at this stage we are only asking you to determine whether you potentially provided a benefit entertainment benefit for FBT purposes.
Entertainment includes provision of food, drink or recreation (eg. taking out employees to a restaurant and staff social functions). However meal entertainment has to be separately identified as it contains special valuation rules and are also excluded from reportable fringe benefits.
If you require further information or assistance in preparing your FBT return feel free to contact us at fbt@krestondormers.com or on (02) 9874 8038
Meal Entertainment Fringe Benefits
Meal entertainment fringe benefit consists of entertainment by way of food and drink, travel and accommodation in connection with the entertainment is also included, (eg. taxi, travel to a restaurant)
The taxable value can be calculated as follows:
- 1. Election to use the “50/50 split method” or “12 week
register method”;
- 2. If no election is made, the actual expenditure is used.
We will generally calculate the Fringe Benefit Tax implication under the 50/50 method and the actual method to determine which gives the best FBT result.
There are some circumstances which the provision of food and drink may not constitute as meal entertainment fringe benefits. These include:
- 1. Staff amenities
- 2. Morning and afternoon tea
- 3. Food or drink provided to employees while on business travel
overnight
- 4. Food and drinks provided at continuing professional a
seminar.
We only require you to provide details that would give rise to a fringe benefit, however, it also gives us the opportunity to determine whether items of entertainment are tax deductible. Giving us more details about these transactions will aid us in completing your year end tax returns.
To help us determine the FBT consequences please provide us with the following details:
- 1. How many employees, family members or clients were
involved
- 2. The situation - when and where the food or drink is provided.
Was it on the employer’s premises, was the employee
travelling on business
- 3. The amount of the expenditure involved and whether any
of this expense was reimbursed.
Although entertainment provided to clients is not subject to FBT, records must be kept on all entertainment (for both staff and client) when the 50/50 method or the 12 week register methods are used.
Exemption
Please note, although some meal entertainment may be exempt (eg. Under the minor benefits exemption or the exemption for the property benefits consumed on business premises) these will be included as meal entertainment fringe benefits if the 50/50 method or the register method are used.
If you require further information or assistance in preparing your FBT return feel free to contact us at fbt@krestondormers.com or on (02) 9874 8038 |
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