Where tax-exempt body entertainment fringe benefits arise from the provision of meal entertainment, such as a Christmas party, you may elect to value those as meal entertainment fringe benefits.
Specifically, providing meal entertainment fringe benefits means:
- providing entertainment by way of food or drink
- providing accommodation or travel connected with such entertainment, or
- paying or reimbursing expenses incurred in obtaining something covered by the above points.
Taxable value of meal entertainment fringe benefits
There are two methods for calculating the taxable value of meal entertainment fringe benefits:
- the 50-50 split method, and
- the 12-week register method.
The 50-50 split method
The taxable value is 50% of your total meal entertainment expenditure for all persons (whether employees, clients or otherwise) during the FBT year.
The 12-week register method
The taxable value of meal entertainment expenditure is the total of all the expenses you incur in providing meal entertainment to all persons (whether employees, clients or otherwise) during the FBT year, multiplied by the 'register percentage'. To work out the register percentage, use the following formula:
total value of meal entertainment fringe benefits provided to
employees and their associates during the 12-week register period, and
total value of meal entertainment provided to all persons during the
12-week register period.
If you use this method, you must keep the register for a continuous period of 12 weeks.
If you elect to use either the 50-50 split method or the 12-week register method, you must split the expenditure into:
- food and drink that amounts to meal entertainment, and
- expenditure that does not amount to meal entertainment.