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FBT Q&A – Staff attendance at sponsorship dinners

Does FBT apply to a meal consumed and travel undertaken by staff who attend an event sponsored by their employer?

Question

We are a government department and often provide sponsorship to third party organisations. In return, we may receive spots for annual award dinners etc. which we then send our staff to.

We assume FBT applies for us as the employer to pay on the dinner provided to staff (plus any associated costs i.e. travel).

Answer

Entertainment for FBT purposes refers to entertainment provided by way of food, drink and recreation, including related accommodation or travel.

It would be difficult to argue the attendance at a sponsorship dinner involving a sit-down meal does not constitute the provision of meal entertainment. As such, staff that attend are being provided with a tax-exempt body entertainment fringe benefit.

The taxable value will be the total of any costs which the employer has incurred for accommodation and travel (if any) as well as the per head cost of the dinner incurred by the third party provider.

Enquiries will need to be made with the particular sponsorship party for the per head dinner costs.

If, after all reasonable efforts have been made to obtain the information the other organisation is not willing or able to do so, subsection 132(4) of the FBT Assessment Act does not require you to keep the required records. A reasonable estimate of the cost of the meal entertainment expenses will be sufficient.

 

 

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