• Common entertainment scenarios

    Christmas parties

    Christmas celebrations: A buffet dinner and drinks

    A Christmas party is hosted by a Sunshine Coast football club. The party is held on their premises. Employees of the football club, and their spouses attend. A buffet dinner and alcoholic and non-alcoholic drinks are provided.

    Is entertainment being provided?

    Yes – where you provide your employees and your employees' associates, with a Christmas party, it will be entertainment. This is regardless of whether the Christmas party is held on your premises or at another venue. Food and drink has been provided in a social situation where the purpose of the function is for employees to enjoy themselves.

    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. The property exemption does not apply because the entertainment provided in this circumstance is a tax-exempt body entertainment benefit.

    GST credits
    Yes – the football club can claim input tax credits for the GST paid on the proportion of such entertainment that is subject FBT in this situation.

    Associates

    Does an exemption apply?
    No – food and drink is not exempt from FBT in this circumstance. The minor benefits exemption does not apply because the provision of the entertainment was not incidental to the provision of entertainment to outsiders.

    GST credits
    Yes – the football club can claim input tax credits for the GST paid on the proportion of such entertainment that is subject FBT in this situation.

    Party held on business premises

    'Thank you' party held on the business premises

    An arts society hosts an end of financial year party to thank sponsors who have provided them with assistance throughout the previous year. Invited sponsors, and a number of senior employees and their spouses attend the party. The party was held on the business premises after close of business. Finger food and drinks were provided by the foundation at a cost of $25 per head.

    Is entertainment being provided?

    Yes, the provision of food and drink in this circumstance is entertainment.

    Employees

    Does an exemption apply?
    Yes, the minor benefits exemption does apply because the provision of the entertainment was incidental to the provision of entertainment to outsiders.

    GST credits
    The arts society could not claim GST credits for the cost of the food and drink provided.

    Associates

    Does an exemption apply?
    The minor benefits exemption will apply in this case as the food and drink provided is incidental to the provision of entertainment to outsiders.

    GST credits
    The arts society could not claim GST credits for food or drink.

    Sponsors

    There is no FBT on benefits provided to sponsors.

    GST credits
    The arts society could not claim GST credits for the cost of the food and drink provided.

    Morning tea on the premises

    Morning tea provided on the business premises

    A family support agency hosts an annual morning tea to thank their employees for their good work during the year. Finger food, and tea and coffee are provided. The cost per head is $20.

    Is entertainment being provided?

    The provision of food and drink in this circumstance is not entertainment. The provision of this morning tea is however a property fringe benefit.

    Employees

    Does an exemption apply?
    The food and drink provided to employees is exempt from FBT because it is provided and consumed on a working day on the business premises.

    GST credits
    The employer can claim GST credits for food or drink.

    Working lunch on the premises

    Working lunch provided on the business premises

    A group of employees from a conservation association are working on a project to develop a new fundraising campaign. They call a planning meeting to discuss timeframes and finance issues. Due to a tight schedule pizza and soft drinks are ordered and delivered to their offices in the association's headquarters for a working lunch.

    Is entertainment being provided?

    The provision of a light meal without alcohol ordered in for lunch while working on a project with a specific deadline is not considered as entertainment.

    Employees

    Does an exemption apply?
    The property exemption for food and drink provided and consumed on business premises will apply to the employees as the food and drink provided is consumed by the employee on a working day at the work premises.

    GST credits
    The employer can claim GST credits for food and drink provided.

    Opening of a new office

    Morning tea to celebrate opening of new office

    A relationship counselling organisation holds a morning tea to celebrate the opening of their new premises. The morning tea is provided on a working day and consists of biscuits, cake, tea, coffee and soft drink. Attendees include employees and invited guests.

    Is entertainment being provided?

    Providing a morning tea of biscuits, cake, tea, coffee and soft drink is not entertainment.

    Employees

    Does an exemption apply?
    Yes an exemption does apply. The food and drink provided to the employees of the relationship counselling organisation is exempt from FBT because it is provided and consumed on a working day on the business premises.

    GST credits
    The employer can claim GST credits for the food and drink.

    Food and drink provided to invited guests

    There is no FBT on benefits provided to the invited guests.

    GST credits
    The employer can claim GST credits for the food or drink provided to the invited guests.

    Meals provided to employees working in hospitality

    Meals provided to employees working at an RSL Club

    A large RSL club employs 27 staff to work in the various parts of the club. Many of the staff work part time and have shifts at different times of the day and night. Dining facilities include a large buffet restaurant and another dining area that serves light meals and beverages from10.00am until midnight. During their rostered work hours employees are provided with meals for lunch and/or dinner from the buffet.

    Is entertainment being provided?

    Yes – providing a meal from the buffet to employees is entertainment.

    Employees

    Does an exemption apply?
    Yes, an exemption does apply. Although providing the meals to employees is entertainment, if the charity was an income tax paying body, it would be entitled to an income tax deduction for the meals provided to employees in the RSL club dining facility.

    Because meals provided in a dining facility to employees are usually income tax deductible, the entertainment provided in this circumstance is not a tax-exempt body entertainment fringe benefit.

    The food or drink provided in this circumstance is a property benefit. The property benefits exemption applies because the meals are being provided to current employees on a working day on business premises.

    GST credits
    The RSL club can claim GST credits for the food and drink.

    Ten pin bowling competition

    Recreational activity

    Employees of a non-profit educational institution participate in a ten-pin bowling competition at a local bowling alley. The cost of the games, shoe hire and light refreshments at the bowling alley is paid for by the education department.

    Is entertainment being provided?

    Yes, paying for employees to play ten-pin bowling is recreational entertainment.

    Employees

    Does an exemption apply?
    An exemption does not apply to the cost of the games, shoe hire and food and drinks. The minor benefits exemption does not apply because the entertainment is not incidental to the provision of entertainment to outsiders.

    GST credits
    The non-profit educational institution can claim GST credits on the cost of their employees participating in the competition.

      Last modified: 29 Nov 2016QC 19917