An employee went to an interstate work-related conference for a couple of days. The Conference itself is an exempt “eligible seminar”, as there was 4+ hours of content.
One night after the conference, the employee went out for dinner with other conference attendees. The dinner was not part of the conference, was 2.5 hours in duration but with no other entertainment and cost the employee $120.
Would this dinner be considered sustenance as it’s due to work related travel? Or would it be subject to FBT as meal entertainment?
The Commissioner’s view in Taxation Ruling TR 97/17 is relatively clear when it comes to an employee dining out while on overnight work-related travel.
When providing an employee with food or drink while undertaking work-related travel, the food or drink does not have the character of entertainment. This is the case even where alcohol is consumed as part of the meal. The cost of the food or drink would be “otherwise deductible” to the employee and therefore, the taxable value of the expense payment fringe benefit is reduced to nil.
However, this is not the case where there is other entertainment (e.g., a floor show) provided with the meal. In such cases the food & drink is considered to form part of the overall entrainment and so becomes the provision of meal entertainment. In such a case FBT will apply and the taxable value of the benefit will be calculated as either a tax-exempt body entertainment fringe benefit or under the meal entertainment valuation rules (i.e. 50/50 or 12-week register).
In this case, as no such further entertainment was provided with the meal the it will be considered sustenance and therefore “otherwise deductible” for FBT purposes.
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