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  • Staff attend a private company product launch

    ACO, a private company, holds an evening function on its premises to launch a new product. Employees from a state government department that assisted ACO with developing and marketing the new product attend. Finger food and alcohol are provided during the launch.

    Attendance at these types of functions is included in the duty statements of the state government department employees. The state government department employees are there to support the launch of the product, market the state government department and to answer questions from the public about how the state government can assist them with their businesses. The main focus of the evening is the launch of the product and not the marketing of the state government department.

    Is entertainment being provided?

    A requirement to attend a business function as part of an employee's duties does not mean that entertainment has not been provided.

    In order to determine if entertainment has been provided, the state government department will need to look at:

    • why is the food or drink being provided - the food and drink are being provided for attendees at the launch to enjoy themselves.
    • what type of food or drink is being provided - finger food and alcohol are being provided. The provision of alcohol indicates that entertainment is being provided.
    • when is the food or drink being provided - the food and alcohol are being provided outside of normal business hours.
    • where is the food or drink being provided - the food and alcohol are being provided at ACO's business premises.

    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. Even though the state government department employees are required to attend as part of their duties, the main focus of the evening is on the launch of the product.

    Who pays the FBT?
    The state government department pays the FBT on the value of entertainment provided to their employees at the launch. The entertainment has been provided to the state government department employees under an arrangement with the state government.

    Input tax credits
    There are no GST credits claimable by the state government department in this situation.

      Last modified: 20 Dec 2017QC 19918