• Determining whether expenditure results in the provision of tax-exempt body entertainment

    The table below sets out the FBT and RFBA treatment of a number of scenarios that may result in a tax-exempt body entertainment benefit. It is based on the information contained in Taxation Ruling TR 97/17. More information can be found in this ruling. The table outlines:

    • Whether the expenditure should be included in the food and drink component of tax-exempt body entertainment. The table indicates whether it is necessary to include expenditure in the tax-exempt body entertainment calculation, based on the particular valuation method used. It also indicates where the taxable value amount should be recorded in the FBT return as 'meal entertainment' or 'tax-exempt body entertainment'. This approach expands on the tables contained in Taxation Ruling TR 97/17 that address whether or not an amount is meal entertainment and whether an FBT liability arises.
    • Whether the expenditure constitutes the recreation component of tax-exempt body entertainment.
    • Whether the expenditure will result in a RFBA for the employees who undertook the recreational activity.

    Tax-exempt body entertainment benefit scenarios

    *Tax-exempt body entertainment fringe benefits (TEBE)

    **The exemption provided in section 41 of the FBTAA 'property consumed by an employee on a working day on business premises' does not apply to tax-exempt body entertainment benefits. Tax-exempt body entertainment benefits are a specific benefit type and are not taxed under the property fringe benefit provisions.

    ***The value attributable to clients and third parties is included in order to calculate the taxable value of the meal entertainment, but would not be included in the percentage of meal entertainment provided to employees and their associates in the 12 week register.

    Tax-exempt body entertainment benefit scenarios

    *Tax-exempt body entertainment fringe benefits (TEBE)

    **The value attributable to the general public is included in order to calculate the taxable value of the meal entertainment, but would not be included in the percentage of meal entertainment provided to employees and their associates in the 12 week register.

    Tax-exempt body entertainment benefit scenarios

    *Tax-exempt body entertainment fringe benefits (TEBE)

    Tax-exempt body entertainment benefit scenarios

    *Tax-exempt body entertainment fringe benefits (TEBE)

    **The value attributable to clients and third parties is included in order to calculate the taxable value of the meal entertainment, but would not be included in the percentage of meal entertainment provided to employees and their associates in the 12 week register.

    'Provide/provided/held' - the employer has paid for some or all of the cost of the food and/or drink. This may include events organised by another entity. Where a morning tea or lunch is organised and employees pay for their own food and/or drink, no fringe benefit is provided.

      Last modified: 17 Jul 2012QC 21998