• Is the food and drink entertainment?

    To determine whether food or drink provided to a person is entertainment, you need to look at the following factors. None of the factors on their own will determine if the food and drink provided is entertainment, but (a) and (b) are considered the more important factors.

    Where your employees are required to attend work functions as part of their employment duties, you will need to examine the circumstances of the situation and what duties are being performed to determine if entertainment has been provided. The fact that an employee is required to attend a function does not mean that entertainment has not been provided.

    Factors to consider

    Explanation

    a

    Why is the food or drink being provided?

    Are you providing the food or drink for employees:

    • to complete the working day in comfort, or
    • to enjoy themselves?

    Providing refreshments to enable the employee to complete the working day in comfort is not generally entertainment.

    Providing food or drink in a social situation where the purpose of the function is for employees to enjoy themselves is likely to be entertainment.

    b

    What type of food or drink is being provided?

    The more elaborate a meal, the more likely it becomes that entertainment arises from eating the meal.

    c

    When is the food or drink being provided?

    Food or drink provided during work time, during overtime or while an employee is travelling for work is less likely to be entertainment. This is because in the majority of these cases, the food or drink is provided for a work-related purpose rather than for an entertainment purpose.

    d

    Where is the food or drink being provided?

    Food or drink provided on your business premises or at the employee's usual workplace is less likely to be entertainment.

    Food or drink provided off your business premises, such as at a function room, hotel, restaurant or consumed with other forms of entertainment, is more likely to be entertainment.

     

    Example: Determining whether food or drink is entertainment
    Gabrielle is currently employed by a non-profit child care organisation and will soon be leaving the organisation for an overseas position in Canada. In recognition of Gabrielle's loyalty and dedication to the organisation over the last twelve years, her employer would like to host a late afternoon farewell function in a private function room at a local hotel.

    Drinks including alcohol and light refreshments such as finger foods will be provided to invited staff, and Gabrielle's family members. The employer has hired a mini bus to transport guests to the venue.

    1. Why is the food or drink being provided?
      The food and drink in this situation is being provided for a social situation where the purpose of the function is for employees, associates and clients to enjoy themselves.
    2. What food or drink is being provided?
      Light refreshments are often not considered to be entertainment however as alcohol will be provided in this situation it is considered to have a social context.
    3. When is the food or drink being provided?
      Food or drink provided on the business premises or at the usual place of work during work hours are less likely to have the character of entertainment. Although in this instance food or drink will be provided during work time hours it still has the character of entertainment as it is a staff social function.
    4. Where is the food or drink being provided?
      The food or drink is being provided in a private function room at the local hotel. Food or drink provided in a function room, hotel, restaurant or coffee shop is more likely to have the character of entertainment.

    Is this activity entertainment?

    Looking at the answers to these questions, providing the farewell function for Gabrielle as outlined above would be classified as entertainment.

    End of example
    Meal entertainment table

    Circumstances in which food or drink provided (either on or off business premises)

    Meal Entertainment
    Y/N

    Fringe benefits tax arises?

    For employees
    Y/N

    For associates
    Y/N

    For clients
    Y/N

    At a social function
    (eg a staff Christmas party)

    Yes

    Yes

    Yes

    No

    In an in-house dining facility (not at a social function)

    No

    No

    Yes

    No

    In an in-house dining facility (at a social function)

    Yes

    Yes

    Yes

    No

    Morning and afternoon teas and light lunches

    No

    No

    Yes

    No

    At a social function or business lunch

    Yes

    Yes

    Yes

    No

    Employee on business travel overnight and dining by themselves or with an employee, employee of an associate or client who is also on business travel overnight (regardless of who pays)

    No

    No

    Yes

    No

      Last modified: 29 Nov 2016QC 19917