Question
If a staff member attends a third party conference and wins a lucky door prize to the value of $1,000 (entry was based on providing a feedback form for the conference), would this need to be declared as a gift and subject to FBT as being over the $300 minor benefit threshold?
Answer
It is difficult to see how the employer would have an FBT liability in the scenario you have presented.
For the benefit to be a ‘fringe benefit’, the definition of ‘fringe benefit’ in s. 136(1) of the FBT Act requires the benefit to be provided by one of the following:
- the employer;
- an associate of the employer;
- an arranger – a person (the arranger) other than the employer, or associate of the employer under an arrangement, or
- a person other than the employer or an associate of the employer, if the employer or associate (i) participates in or facilitates the provision or receipt of the benefit.
Accordingly, a fringe benefit will not arise unless there is an agreement of some kind between the employer and a third party.
The prize in this scenario does not appear to meet this condition.
The prize was purely won by chance and does not exhibit any employer involvement (by way of participation/facilitation etc) , other than perhaps the employer paying for the entrance fee/ticket to attend the function. This on its own is too remote a nexus for a fringe benefit to arise in our view.
It could also be argued the prize is not “… in respect of the employment of the employee…” which is another pre-condition of the definition of ‘fringe benefit’.
Instead the employee has won the prize having attended the conference, submitted the feedback form and having been drawn out as the winner from a pool that included other conference attendees who submitted the feedback form.