Question:
With the introduction of the $5,000 cap in regards to salary packaged meal entertainment and entertainment facility leasing expense benefits commencing from 1 April 2016, what impact does this have for a PBI employer where, for example, meal entertainment is provided directly to employees not via salary packaging. Is this now potentially subject to FBT, or does a meal entertainment exemption still apply?
Answer:
Non-salary packaged meal entertainment and entertainment facility leasing expenditure provided on or after 1 April 2016 is still eligible for existing exemptions that PBI employers are entitled to.
Salary packaged meal entertainment and entertainment facility leasing expenditure provided from 1 April 2016 is now subject to a grossed up cap of $5,000 – any excess over this amount is counted towards existing cap thresholds and therefore could result in a PBI employer being subjected to FBT.
Further, the 50/50 method or 12 week register methods are not able to be used in respect of such salary packaged entertainment benefits. Salary packaged meal entertainment and entertainment facility leasing expenses are included for payment summary reporting purposes.
However, meal entertainment and entertainment facility leasing expenses that are not provided as part of a salary packaging arrangement remain non-reportable and are still eligible for FBT exemption for a PBI employer.