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WHEN IS FOOD AND DRINK CONSIDERED ENTERTAINMENT FOR FRINGE BENEFIT TAX?

If you provide food, drink or recreation benefits to your employees or their associates it may be considered entertainment and therefore subject to Fringe Benefit Tax (FBT).

To determine whether the food or drink is considered entertainment there are some key factors to look out for:

Factor Less likely to be entertainment More likely to be entertainment
Why are you providing the food or drink for employees? So employees can complete the working day in comfort In a social situation where the purpose is for employees to enjoy themselves
What type of food or drink are you providing? Light food and refreshments, no alcohol Elaborate food or meal, alcohol
When are you providing the food or drink? During work time or overtime, or while employee is traveling for work Outside work time
Where are you providing the food or drink? On your business premises or at the employee’s usual workplace Off your business premises, such as at a function room, hotel or restaurant, or consumed with other forms of entertainment

If you have provided a fringe benefit to employee during the FBT year, you may have an FBT liability and should lodge an FBT return to the ATO.

However, there are also Exemptions and Concessions available to help reduce your FBT. By keeping accurate records, you can help improve your chances of meeting eligibility criteria when the time comes to review your FBT obligations at the end of the FBT year.

You can find more information about Food and Drink Fringe Benefits here: https://www.ato.gov.au/Business/Fringe-benefits-tax/Types-of-fringe-benefits/Entertainment-related-fringe-benefits/When-is-food,-drink-and-recreation-considered-entertainment-/

 

The content within these articles was correct at the time of writing. Please contact us for updated information and advice. 

We provide accounting and wealth management services to clients in Woodend, Gisborne and Macedon Ranges areas within Victoria Australia.

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