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Financial Accounting: Fringe benefits tax
Entertainment fringe benefits
Special issues for entertainment fringe benefits
The following general guidelines determine University’s FBT liability:
Light meals
Morning and afternoon tea, and light meals on a working day are not regarded as entertainment, except where alcohol is provided. In this case, the cost of both the meal and the alcohol is subject to FBT.
In-house dining facility
No FBT is payable in respect of providing food and drink in an in-house dining facility. The University Staff Club is regarded as such a facility and therefore expenses incurred there escape FBT liability.
Christmas parties
For normal businesses, Christmas parties and other entertainment are not subject to FBT if the entertainment is irregular or infrequent. However, this does not apply to tax-exempt bodies such as Macquarie University . For the University, the entire expense is subject to FBT.
Business travel
When employees are on business travel, and the University reimburses their meal costs (even with alcohol), no part of the meal cost is subject to FBT. The same applies even when the employees take clients out; the employees’ meals are not be subject to FBT. FBT liability only arises for non-travelling employees dining with the travelling employee.
Social functions
Expenses for employees for parties and social functions are subject to FBT even when the party is held in an in-house dining facility.
Seminars
Food and drink incidental to attendance at an eligible seminar are not subject to FBT. To qualify as an eligible seminar, there are certain conditions to satisfy.
To qualify as an "eligible seminar", the seminar must:
- be a conference, convention, lecture, training session, or speech;
- it must have a continuous duration of 4 hours (excluding breaks);
- business discussions in the normal course of business are not eligible, unless it is an exempt training seminar (see below);
- the sole or dominant purpose of the seminar must not be the promotion or advertising of the business; and
- the sole or dominant purpose must not be the provision of entertainment.
In practice, a seminar which includes the provision of entertainment by way of food or drink which is incidental to a persons attendance at a seminar is not subject to FBT. However, the cost of entertainment in the form of recreation (eg. trip to a tourist attraction) may be subject to FBT, particularly if it is an optional and separate charge. Any component of an all-inclusive registration fee for an eligible seminar which is attributable to recreation may be subject to FBT on a proportional basis.
"Exempt training seminars" qualify as eligible training seminars where:
- the seminar is organised to discuss general policy issues; and/or
- to enable employees to discuss general policy issues relevant to the internal management of the University's business; and
- the seminar is not held on premises of the University. It must be held on premises of a person whose business includes the organising of seminars or making premises available for those purposes.
Where the above conditions are satisfied, the seminar will be an eligible seminar, and food and drink incidental to attendance at the seminar is not subject to FBT.