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When is food, drink and recreation considered entertainment?

Find out if food, drink and recreation you provide to employees is considered entertainment that is subject to FBT.

Last updated 11 January 2023

Does this affect you?

As an employer, you are providing a fringe benefit if all the following apply:

  • You provide food, drink or recreation to your employees or their associates (such as their families).
  • The food, drink or recreation is considered entertainment.
  • The entertainment is not an exempt benefit.

Entertainment includes:

  • reimbursing employee expenses associated with entertainment
  • accommodation and travel associated with entertainment.

You may be providing entertainment in situations such as:

  • business lunches and drinks
  • parties and staff social functions
  • product release functions, reward and recognition functions
  • sporting or theatrical events
  • gym or sporting club memberships
  • sightseeing tours and holidays.

When is food or drink considered entertainment?

Use the factors below to determine if the food or drink you provide is considered entertainment. All the factors are relevant, but the first 2 ('why' and 'what') are the most important.

Determining if food or drink is entertainment


Less likely to be entertainment

More likely to be entertainment

Why are you providing the food or drink for employees?

So employees can complete the working day in comfort

In a social situation where the purpose is for employees to enjoy themselves

What type of food or drink are you providing?

Light food and refreshments, no alcohol

Elaborate food or meal, alcohol

When are you providing the food or drink?

During work time or overtime, or while employee is travelling for work

Outside work time

Where are you providing the food or drink?

On your business premises or at the employee's usual workplace

Off your business premises, such as at a function room, hotel or restaurant, or consumed with other forms of entertainment


Example: determining whether food or drink is entertainment

Twinsprings Pty Ltd has employed Gabrielle for a number of years. She will soon be leaving the company.

In recognition of Gabrielle's loyalty, her manager, Paul, wants to host a late afternoon farewell function at a local hotel. Paul plans to:

  • provide drinks, including alcohol, and light refreshments such as finger foods
  • invite staff, clients and Gabrielle's family members
  • hire a mini bus to take guests to the venue.

To determine whether fringe benefits tax (FBT) applies to the function, Paul needs to consider:

  • Why – Twinsprings is providing the food and drink in a social situation where the purpose is for employees, associates and clients to enjoy themselves.
  • What – while light refreshments are often not considered to be entertainment, as Twinsprings is providing alcohol there is a social context.
  • When – although Twinsprings is providing the food and drink during working hours, it has the character of entertainment as it is a social function.
  • Where – Twinsprings is providing the food and drink in a private function room at the local hotel, not on their business premises.

Paul determines that the farewell function for Gabrielle should be treated as entertainment.

End of example

Webinar: Eat, drink and be merry

Media: Eat, drink and be merry Link (Duration: 56:59)


To find out how these rules apply in specific situations, such as Christmas parties, see:

When is recreation considered entertainment?

Recreation that is entertainment includes amusement, sport and similar leisure activities, such as:

  • a game of golf
  • a gym membership
  • membership of a sporting club
  • theatre or movie tickets
  • a joy flight or harbour cruise
  • accommodation and travel in connection with entertaining clients or employees over a weekend at a tourist resort.

To find out how these rules apply in specific situations, such as sports days, see:

How to classify entertainment-related benefits

There is no specific category of 'entertainment fringe benefit'. Instead, you classify entertainment as one of four types of fringe benefits, depending on the circumstances. For example:

  • the cost of theatre tickets purchased by an employee and reimbursed by the employer may be an expense payment fringe benefit
  • providing food and drink may be a property fringe benefit
  • providing accommodation or transport in connection with entertainment may be a residual fringe benefit
  • entertainment provided by an employer who is exempt from income tax (for example, a registered charity) may be a tax-exempt body entertainment benefit.