Exempt entertainment benefits for business
The following exemptions are for commercial businesses. There are different exemption rules for not-for-profit and government organisations.
Generally, fringe benefits tax (FBT) does not apply if the entertainment is:
You can also reduce your FBT (or eliminate it entirely) by:
- providing a benefit that the employee could have claimed as an income tax deduction, such as a training seminar (this is called the 'otherwise deductible rule')
- having employees contribute to the cost of a benefit, such as paying their own green fees at a corporate golf day
- giving employees a cash bonus instead of a benefit – the employee would then pay income tax on the bonus, instead of you paying FBT on the benefit.
Food or drink consumed on the premises
FBT does not apply to food or drink if it is provided to, and consumed by, current employees on your business premises on a working day.
It doesn't matter where the food or drink is prepared, as long as you provide it on your premises. A corporate box is not considered part of your business premises.
This exemption does not extend to associates of employees (such as partners). However, food or drink provided to associates may be exempt as a minor benefit. If you provide food or drink to both employees and their associates, and the food or drink for associates is not exempt, you can apportion the expenditure on a per head basis to work out your FBT.
There is no FBT for providing staff amenities on your business premises, such as coffee making facilities, vending machines and water dispensers.
Entertainment may be exempt from FBT if it is a minor benefit, taxi travel, or food and drink on your premises.
Example: food and drink on business premises
A business employer provides alcoholic drinks and a buffet meal for 10 current employees and their 10 partners on business premises on a work day. The cost is $50 per head, or $1,000 in total.
The employer doesn't pay FBT for the food and drink provided to the:
End of example
- employees, because it is provided on a working day on business premises
- employees' partners, because the employer determines it is exempt as a minor benefit.