Fringe Benefits Tax (FBT) – Entertainment

Business Services,Taxation for Business

Fringe benefits tax (FBT) is a tax an employer pays on particular benefits provided to their employees, associates or third parties. FBT is calculated on the taxable value of the fringe benefits provided and is independent of income tax. The FBT year runs from 1 April to 31 March, with a rate of 47% for the year ending 31 March 2019.

FBT law includes a variety of FBT categories with specific valuation rules for each.

According to the ATO, Entertainment means:

  • entertainment provided by way of food, drink or recreation
  • entertainment related accommodation or travel (even if provided during business events or discussions)

Entertainment includes, for example:

  • Drinks, meals, cocktail parties and staff social functions
  • Sport or theatre events, sightseeing tours and holidays
  • Entertaining employees and non-employees. For example providing clients with a holiday.
  • Recreation includes amusement, sport and similar leisure pursuits (a game of golf, theatre or movie tickets, a joy flight or a harbour cruise)

Various types of fringe benefits may arise from the provisions of different forms of entertainment.

Entertainment is generally not deductible for income tax purposes; however, there are a few exceptions to the rule. The major exception is where fringe benefits tax has been paid on the value of the entertainment. If this is the case, the expenditure is deductible.

 

If you’d like to speak to us about your particular circumstances please do not hesitate to contact AWT at clientlink@awtaccountants.com.au

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Click here to read our blog post on Fringe Benefits Tax 2018: Log Book Requirements