Consider Diane’s case
Diane runs a company with a staff of twelve. Bill is her general manager and receives use of a company car as part of his remuneration. Diane throws a large Christmas party each year to which she invites all her staff, as well as other meal benefits during the year. Diane is concerned that the 49% FBT rate may apply to these benefits.
Whether there is a Fringe Benefit Tax (FBT) obligation depends on the following:
– Availability to Bill for private use. Does Bill have access to the car outside work hours? If Bill only uses the car during work hours generally no FBT applies, however if Bill garages the car at his house FBT may apply. Where private use is minor or infrequent FBT may be minimised.
– Whether or not Bill makes contributions to the running costs of the vehicle. Personal contributions may reduce any FBT obligations.
Entertainment is a complex area of FBT. Some aspects to consider are:
– If the entertainment is of a minor and infrequent nature, such as a Christmas party that costs less than $300 per employee, then the entertainment is exempt from FBT.
– Diane providing sandwiches during board meetings is less likely to be classified as entertainment as it is for sustenance during work hours.
– Alternatively a monthly restaurant dinner for staff on a Friday night would be subject to FBT as it is after hours, offsite and a social nature.
Should you wish to discuss your FBT obligations please feel free to contact Andrew Marshall or Janine Orpwood on 5427 8100 for an initial consultation.