Do you provide your employees (and/or their associates) with food and drink, gifts, or leisure activities? These are defined as “entertainment” and you, the employer, could be subject to Fringe Benefits Tax (FBT).
What is “entertainment”?
Entertainment includes food and drinks, recreation, accommodation and travel in connection with such entertainment. Recreation includes amusement, sport and leisure pursuits (eg golf, gym membership, movie tickets, joy flight).
What you need to do:
1. Food and Drink
Questions to ask to determine whether food or drink is entertainment:
2. Is it exempt?
Minor benefits are exempt from FBT, provided they are less than $300 and it is unreasonable to treat them as a fringe benefit. Some factors to consider if it is exempt are:
Food or drink consumed on the business premises by current employees on a working day is exempt (including alcohol). However, food and drink provided to associates (ie spouses) on the premise, on a working day during normal hours, may be subject to FBT.
Are you confused? Rather than be baffled by the complexities, we recommend when you are reconciling your bank transactions, you allocate these types of costs to an appropriate account code, one called "Entertainment" for example. Be sure to include the following details:
Your accountant can then determine whether FBT applies and how to calculate it.
The fringe benefits may need to be reported on your employees’ PAYG Summary.
The Fringe Benefits Tax (FBT) year runs from 1 April through to the 31 March. If you need to lodge a FBT return it is due by 21st May.
Remember to call us should you have any questions regarding your accounts or business.