14.5 Does an exemption apply?
An exemption applies to the provision of food or drink in the following circumstances.
Food and drink consumed on business premises (property exemption)
Food and/or drink provided to, and consumed by, current employees on your business premises on a working day are exempt property benefits (refer to section 20.6 of Fringe benefits tax exempt benefits). The exemption from FBT applies regardless of whether:
- the food and drink is prepared on your premises (a corporate box is not part of your business premises)
- entertainment arises from the provision of food and/or drink.
Food and/or drink provided on your business premises to associates of employees (for example, spouses) is not exempt from FBT. Where you provide food and/or drink on the same occasion to both employees and their associates, you may have to apportion the expenditure on a per head basis.
Example: provision of meal entertainment employees and associates
An employer provided drinks and a buffet meal for 10 employees and their spouses on business premises. The cost was $500. The cost of the entertainment provided to employees was $250; this is exempt from FBT. The cost related to entertainment of the associates ($250) is not exempt from FBT.
In the above example, the provision of the food and drink is the provision of meal entertainment. If the employer elects to use one of the meal entertainment fringe benefit valuation rules, they must include all of the $500 expenditure when calculating their total meal entertainment expenditure for the FBT year.
End of example
When this exemption does not apply
This exemption does not apply to:
- employers who are exempt from income tax when entertainment arises from the provision of food andor drink
- income tax-paying bodies who elect to value the entertainment as meal entertainment
- meals provided under a salary sacrifice arrangement after 7.30pm AEST on 13 May 2008.
Minor benefits exemption
Depending on the entertainment provided, the
benefit may qualify for the minor benefits exemption (refer to section 20.8 of Fringe benefits tax exempt benefits).