Fringe Benefits Tax and Meal Entertainment

Posted on 15th June 2016 by Ashley Dawson

It’s Fringe Benefits Tax (FBT) season again so now is the time to consider the benefits you provided to your employees in the previous 12 months and whether you are required to lodge a FBT return.  Fringe benefits are benefits provided to employees and their associates (e.g. a spouse) as a result of employment.

Fringe benefits can include motor vehicles provided to employees, paying for employee parking, staff functions and expenses paid on behalf of employees (among others).

One of the most common fringe benefits is the provision of food and entertainment to employees (meal entertainment). If you host a work Christmas party, after work drinks, or pay for café and restaurant meals for staff you may be liable for FBT.

There are two methods available for valuing meal entertainment: actual and 50/50 split methods.

The actual method requires detailed records to be kept of the attendees of events including the total number of attendees and the mix of clients versus employees and their associates. While the record keeping requirements can be more onerous the actual method can be more beneficial where there is a higher proportion of clients attending events as there are a number of exemptions available.

The 50/50 split method values meal entertainment by splitting the cost down the middle. So you are only paying fringe benefits on half of the meal entertainment expenses for the year. The major benefit of this method is requirement for less detailed record keeping requirements.

We have a useful meal entertainment spreadsheet available to assist you with keeping a record of your meal entertainment expenses throughout the year. By keeping the detailed record we will be able to assess whether the actual or 50/50 split method will be more beneficial.

Please contact us if you would like a copy of the entertainment spreadsheet or to discuss any FBT questions you may have.