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  • If your organisation provides food and drink or recreation to its employees

    The following steps should be taken into account:

    • Determine whether the food, drink or recreation is entertainment. 14.3
    • Consider if an exemption applies. 14.5
    • If no exemption applies, determine whether the entertainment is a tax-exempt body entertainment fringe benefit. 15
    • If the benefit is not a tax-exempt body entertainment fringe benefit, it may be a property, expense payment, or residual fringe benefit. 14.6
    • Decide if you can reduce your FBT payable on the food, drink or recreation. 19
    • Keep the appropriate records. 14.13
    • If required, report an amount on the employee's payment summary. 14.14

    Common situations where entertainment is provided by government organisations

    A Christmas cocktail party is hosted by a state minister's office is held at City Hall. Representatives from the host department and other state government departments and their spouses attend. Gourmet finger food and alcoholic cocktails are provided.

    Is entertainment being provided?

    Yes. Where a government organisation provides employees and their associates with a Christmas party, it will be entertainment. This is regardless of whether the Christmas party is held on the government organisation's premises or at another venue.

    Employees

    Does an exemption apply?
    No. The minor benefits exemption does not apply because the provision of the entertainment was not incidental to the provision of entertainment to outsiders. The property exemption does not apply because the entertainment provided in this circumstance is a tax-exempt body entertainment fringe benefit.

    A state is deemed to be an associate of each authority of the state. For a disaggregated state government, each nominated body is an employer.

    Input tax credits
    The state minister's office can claim input tax credits for the GST paid on the proportion of such entertainment that is subject FBT.

    Associates

    Does an exemption apply?
    No. The minor benefits exemption does not apply because the provision of the entertainment was not incidental to the provision of entertainment to outsiders.

    Input tax credits
    The state minister's office can claim input tax credits for the GST paid on the proportion of such entertainment that is subject FBT in this situation.

    See also:

      Last modified: 20 Dec 2017QC 19918