Member Q&A – Meals provided at public event

Question

We have a public event on our premises & provide light refreshments consisting of pizza, sandwiches, and non-alcoholic events. Would this constitute meal entertainment with FBT payable for employees that attend the event? The cost per head for the event is less than $300.

We do not use the meal entertainment 50/50 valuation rules – would it matter if we did?

Answer

We would suggest no FBT is applicable to the scenario you have outlined on the basis either:

– the meal does not constitute meal entertainment and therefore the section 41 property consumed on business premises exemption applies, or

– if the meal does constitute meal entertainment (which is unlikely in our view), the minor benefit exemption (see section 58P(1)(d)) exemption will be available as the entertainment is incidental to the provision of entertainment to outsiders and does not consist of, nor is provided with a meal, other than a meal consisting of light refreshments.

If however you opted to use the Division 9A meal entertainment rules (and applied the 50/50 valuation approach) all meal entertainment is required to be included before applying the 50/50 calculation (refer ATO website for further discussion)  This is one of the disadvantages of the 50/50 method.

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