Member Q&A: Cost of a band at end of year function, 50/50 method

Question

We held an end of year function at a convention centre where staff and partners from all our offices were invited. We incurred costs for hiring the venue and catering costs for the food and drink package provided by external caterers.

In addition, we separately engaged a band to preform for the night with singer also taking on the master of ceremonies duties.

Can we use the 50-50 method for the cost of hiring the band?

Answer

No.

For meal entertainment and entertainment facility leasing expense (i.e., venue hire) costs, there is the ability to elect that only 50% of such costs are subject to FBT.

However, the separate cost of hiring the band is recreational entertainment. Although recreation falls within the entertainment definition, it is not meal entertainment nor an entertainment facility leasing expense.

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