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  • Entertainment benefits

    References to employers and employees equally apply where the benefit is provided by a third party under an arrangement with the employer, or is provided to an associate of the employee.

    Providing entertainment

    The provision of entertainment means the provision of either:

    • entertainment by way of food, drink or recreation
    • accommodation or travel in connection with, or to facilitate the provision of, such entertainment.

    Entertainment includes, for example:

    • business lunches and drinks, cocktail parties and staff social functions
    • sporting or theatrical events, sightseeing tours and holidays
    • entertaining employees and non-employees (for example clients) over a weekend at a tourist resort or providing them with a holiday.

    Recreation includes amusement, sport and similar leisure pursuits (for example, a game of golf, theatre or movie tickets, a joy flight or a harbour cruise).

    Although there is no entertainment fringe benefit type as such, providing entertainment may give rise to various types of fringe benefits. For example:

    • the cost of theatre tickets purchased by an employee and reimbursed by the employer may constitute an expense payment fringe benefit
    • providing food and drink may constitute a property fringe benefit
    • providing accommodation or transport in connection with entertainment may constitute a residual fringe benefit
    • entertainment provided by a tax-exempt employer may constitute a tax-exempt body entertainment benefit.

    Some entertainment may be exempt from FBT. For example, food and drink provided to and consumed by current employees on business premises on a working day may be exempt.

    Salary packaged entertainment benefits

    From 1 April 2016, there are changes to the fringe benefits tax treatment of salary packaged entertainment benefits. If you, the employer, provide these benefits to your employees (for example, through the use of a meal card), you need to be aware of these changes:

    • all salary packaged entertainment benefits are reportable and will be included on an employee’s payment summary or income statement where their reportable fringe benefits amount is more than $2,000 in an FBT year
    • the 50-50 split method and 12-week register method cannot be used for valuing salary packaged meal entertainment or entertainment facility leasing expenses.

    See also:

      Last modified: 10 Feb 2021QC 16948