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  • How to reduce the FBT you pay

    There are various ways in which your organisation can reduce the FBT it pays. In some cases, your FBT payable could be reduced to nil.

    You can reduce your organisation's FBT liability in the following ways.

    Provide benefits which are income tax deductible

    Your organisation may not have an FBT liability if you give an employee a benefit that they would otherwise have been able to claim as an income tax deduction.

    Entertainment provided as part of employee's job

    There are some instances where entertainment provided as part of an employee's job would be otherwise deductible to the employee. For example, employees of the Office of Film and Literature Classification would need to preview films in order to classify them.


    The otherwise deductible rule may apply to food or drink provided at seminars. If your employee would have been able to claim an income tax deduction for the cost of attending the seminar had they paid for it, the otherwise deductible rule applies as follows.

    Food or drink is not entertainment

    If the food or drink…


    Does not amount to entertainment.

    The registration fee would have been deductible in full and FBT does not apply.

    Food or drink is entertainment

    If the food or drink does amount to entertainment and…


    Is reasonably incidental to the employee attending seminars that go for at least four hours.

    FBT does not apply.

    Is not reasonably incidental to the employee attending seminars that go for at least four hours.

    Only that proportion of the registration fee which does not relate to the food or drink would have been deductible and FBT does apply.

    What is a seminar?

    A seminar is any training session, including a conference, convention, lecture, meeting, speech, question and answer session or educational course.

    A planning day (where employees discuss general policy issues relevant to the internal management of your business) conducted on property that is occupied by a person (other than the employer) whose business includes organising seminars or making property available for conducting seminars, is a seminar.

    What is not a seminar?

    A business meeting, where the main purpose of the meeting is to give or receive information, or discuss matters relating to the organisation, is not a seminar. Neither, for example, is a presentation, where the main purpose is to promote or advertise a business (or prospective business) or its goods or services.

    What does reasonably incidental mean?

    Food or drink is reasonably incidental to a seminar if it:

    • is provided for sustenance because of the duration, time of day or location of the seminar
    • is provided immediately before, during or immediately following working sessions of the seminar
    • is available to all participants.

    Which part of the seminar can be included in the four hours?

    The four hours does not include any part of the seminar that occurs during a meal or any breaks during the seminar for meals, rest or recreation.

    Example: Food and drink provided at seminar is not entertainment
    A non-profit vocational guidance organisation pays for an employee to attend a seminar about adult learning trends. The seminar is held from 9.00am to 4.00pm in a city hotel. Morning and afternoon tea and lunch are provided during the day. The employer pays the organisation presenting the seminar.

    The food or drink provided in these circumstances does not amount to entertainment and is therefore not meal entertainment. It is a property fringe benefit. The full cost of attending the seminar would have been income tax deductible to the employee had the employee paid for it. The taxable value of the property fringe benefit can be reduced to nil under the 'otherwise deductible' rule.

    End of example

    Employee contributions

    You may be able to reduce your organisation's FBT liability by having your employee contribute towards the cost of a fringe benefit. The contribution is usually a cash payment made to you or the person who provided the benefit.



    The benefit is a tax-exempt body entertainment fringe benefit.

    You cannot reduce the value of the benefit by any employee contributions paid directly to you.

    If the employee contribution is paid directly to a third party benefit provider, the value of the benefit is reduced by the amount of employee contributions, provided you are invoiced for the net amount.

    The benefit is a property, residual or expense payment fringe benefit.

    You can reduce the value of the benefit by employee contributions paid directly to you.

    Provide employees with cash bonus

    As it is the employer who pays FBT, if a cash bonus is provided to an employee, it would be the employee who would pay income tax on the bonus.

    Example: Employer pays employee cash bonus
    A non-profit educational institution usually has a Christmas party for its executive level employees to thank them for their hard work throughout the year. The cost per head of the Christmas party is $300. The institution has always paid FBT on this event.

    In a change of policy, instead of the Christmas party, it pays its executive employees a cash bonus of $300. The employees would pay income tax on the $300 bonus, instead of the educational institution paying FBT.

    End of example

    GST and entertainment

    As a general rule, you can claim GST credits for the cost of providing entertainment that is a fringe benefit.

    Note that exempt benefits are not fringe benefits. They are not income tax deductible nor can you claim GST credits for the cost of providing them.

      Last modified: 08 Jul 2019QC 19917