Entertainment Expenses and Staff Amenities
The ATO’s rules regarding Entertainment Expenses can be quite complex and factors such as who they are provided to, the venue that it is provided in and what is provided can influence the ability to deduct the expense outright, whether Input Tax Credits are available or whether Fringe Benefit Tax will need to be considered. In some cases, even if such an expense may attract Fringe Benefit Tax, the Minor Benefit exemption may apply to reduce any tax liability.
Below is a quick reference of some of the more common entertainment expenses that your business may provide.
|
Type of Expense |
Does FBT apply? |
Income Tax Deduction available? |
Input Tax Credits available? |
Minor Benefit Exemption available? |
| Employee amenities at business premise – tea, coffee, water, vending machine food |
No |
Yes |
Yes |
Not applicable |
| Light meals and refreshments at business premise in connection to meetings, trainings, over time |
No |
Yes |
Yes |
Not applicable |
| Social activity functions at business premise provided to employees – Christmas parties, Friday nights drinks |
No |
No |
No |
Not applicable |
| Business meals at restaurants/similar venues (outside of business premise) provided to employees |
Yes |
Yes | Yes |
Yes |
| Business meals at restaurants/similar venues (outside of business premise) provided to clients & suppliers |
No |
No |
No |
Not applicable |
| Basic sustenance meals consumed by employees on overnight business travels |
No |
Yes |
Yes |
Not applicable |
| Gifts, voucher cards, hampers provided to employees |
Yes |
Yes | Yes |
Yes |
Please note that the table above is relevant for businesses using the Actual Method of quantifying Fringe Benefits. Businesses using the 50/50 Method or the 12 Week Register Method do not have access to the Minor Benefit Exemption. Where the Minor Benefit Exemption has been used, you do not have the ability to deduct the expense for income tax purposes or claim the Input Tax Credits for GST purposes.
Contributed by: Helene Kosasie
