15.6 Is the benefit a tax-exempt body entertainment fringe benefit?

A tax-exempt body entertainment fringe benefit is non-deductible entertainment provided to employees (and their associates) by a tax-exempt body. Only entertainment that is non-deductible for income tax purposes can give rise to this benefit. Where entertainment is deductible, it will not constitute a tax-exempt body entertainment fringe benefit.

For the purpose of identifying a tax-exempt body entertainment fringe benefit, and working out whether the expenditure is deductible for income tax purposes, you are treated as though you are a taxable entity. That is, you should ask yourself, 'If my organisation paid income tax, would the organisation be entitled to an income tax deduction for this expenditure?'

The benefit may arise from entertainment expenses incurred by an employer who is wholly or partially exempt from income tax or who does not derive assessable income from the activities to which entertainment relates.

In general, entertainment expenses are non-deductible for income tax purposes. However, some specific entertainment expenses are deductible - for example, the cost of meals provided to employees in a staff cafeteria, excluding:

  • benefits associated with a social function
  • the cost of meals at certain business seminars
  • meals on business travel overnight.

See also:

    Last modified: 09 Aug 2016QC 17811