FBT Article – Does a section 57A employer ever pay FBT on non-salary packaged meal entertainment it provides to employees?

Some employers within the ambit of s. 57A of the FBT Act may be paying FBT when not required to do so.

This is a feature article available to the public. For access to all articles from TaxEd, please click here to become a member.

Much effort goes into determining whether fringe benefits by way of meal entertainment are provided to employees.

Meal entertainment is entertainment by way of food, drink, and travel and accommodation in relation to such entertainment. For example, staff lunches at restaurants, the Christmas party and employee social events involving food and alcohol.

For employers exempt under s. 57A FBTAA (being employers subject to $30,000 and $17,000 capping rules), FBT is not payable by the employer in relation to non-salary packaged meal entertainment-type fringe benefits which are provided. This outcome occurs regardless of:

  • whether an employer elects to use the special FBT valuation rules for meal entertainment;
  • whether an employee has received fringe benefits in excess of the capping level applicable for that type of employer ($30,000 and $17,000); and
  • whether the employee has salary packaged meal entertainment.

The outcome that FBT is not payable on non-salary packaged meal entertainment is due to s. 5B(1L) of the FBTAA. Section 5B(1L) operates such that a s. 57A employer disregards non-salary packaged meal entertainment when calculating its FBT liability.

Section 57A employers should ensure that FBT reporting processes do not inadvertently result in non-salary packaged meal entertainment fringe benefits being subject to FBT.

Disclaimer: This article is based upon information available as at the time of publishing and may be subject to change.