We are a local Council.
As part of our corporate induction process for new employees, a bus tour has been introduced where a group of new employees are taken on a bus to tour the Local Government Area and visit the various Council owned business sites (theatre, art gallery, depot, waste facility, administration office, parks etc).
During the bus tour they are provided with food & non-alcoholic drinks. An employee from personnel leads the tour and presents information in relation to the sites visited. The bus tour then concludes at an appropriate business location where the new employees continue the more formal aspects of the corporate induction process.
The bus used is hired from a local supplier.
Are there any FBT implications to consider?
In our view, the bus tour relates to work-related travel between work sites being part of the new employee’s induction process.
The transport is a residual benefit but will be exempt pursuant to section 47(6) of the Fringe Benefits Tax Assessment Act 1986 (‘the FBT Act’). Section 47(6) exemption is for a residual benefit consisting of the provision or use of a motor vehicle (other than a car) to a current employee in respect of their employment, on the condition that either:
i. the motor vehicle was not used for private purposes at any time during the year when the benefit was provided; or
ii. all private use of the motor vehicle during the year was limited to work-related travel by the employee.
The food & drink provided on the tour will not constitute meal entertainment (being merely sustenance) but will be considered to be the provision of a property benefit. However, once again we consider no FBT will arise on the basis the food & drink provided is an exempt benefit because:
i. if provided on one of the Council owned business sites, it will be exempt pursuant to section 41 of the FBT Act as property consumed by a current employee on a working day on the employer’s premises; or
ii. the value of the food & drink per head is less than $300 and is therefore eligible for the minor benefit exemption.
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