Does FBT apply to a meal consumed and travel undertaken by staff who attend an event sponsored by their employer?
We are a government department and often provide sponsorship to third party organisations. In return, we may receive spots for annual award dinners etc. which we then send our staff to.
We assume FBT applies for us as the employer to pay on the dinner provided to staff (plus any associated costs i.e. travel).
Entertainment for FBT purposes refers to entertainment provided by way of food, drink and recreation, including related accommodation or travel.
It would be difficult to argue the attendance at a sponsorship dinner involving a sit-down meal does not constitute the provision of meal entertainment. As such, staff that attend are being provided with a tax-exempt body entertainment fringe benefit.
The taxable value will be the total of any costs which the employer has incurred for accommodation and travel (if any) as well as the per head cost of the dinner incurred by the third party provider.
Enquiries will need to be made with the particular sponsorship party for the per head dinner costs.
If, after all reasonable efforts have been made to obtain the information the other organisation is not willing or able to do so, subsection 132(4) of the FBT Assessment Act does not require you to keep the required records. A reasonable estimate of the cost of the meal entertainment expenses will be sufficient.
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This article provides a general summary of the subject covered as at the date it is published. It cannot be relied upon in relation to any specific instance. TaxEd Pty Ltd and any person connected with its production disclaim any liability in connection with any use. It is not intended to be, nor should it be relied upon as, a substitute for professional advice.