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michaelwu(Initiate)Initiate
20 Apr 2022

Dear ATO officer,


We are an ACNC registered charity and tax exempt body.


We are providing food and drink to employees in Christmas party and some annual events, we also pay the restaurant bills for departmental team Christmas lunch.


When we lodge the FBT return we use the actual cost of these meals as taxable value under 'Tax-exempt body entertainment fringe benefit', however as our tax-exempt body entertainment fringe benefit arise from the meal entertainment only, we are considering if we can reclassify these benefit as 'Meal entertainment fringe benefit' where the 50:50 split method is available (according to ATO FBT guide for employers 14.8 and 15.10)


As our meal entertainment is more than 90% provided to our own employees, switching to 50:50 method can save us the FBT payable on those benefits, could you advise if we can make this change and if there is any compliance issue to be considered


thanks


Michael

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1,095 views
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Most helpful reply

AriATO(Community Support)Community Support
27 Apr 2022

Hi @michaelwu


I'm back with some answers for you.


Based on what you've said, yes you can classify your tax-exempt body entertainment fringe benefits as meal entertainment fringe benefits. As long as there's no salary sacrifice and the benefits are provided by the employer and not anyone else.


If you choose to classify these benefits as such then you need to reclassify all fringe benefits in the FBT year that arise from giving meal entertainment. This must be done no later than the day your FBT is due or by 21st May if you don't need to lodge.


If you choose the 50:50 split, the taxable value is 50% of your total meal expenses. This includes expenses that would usually be exempt or not subject to FBT. You also won't be able to apply the property benefits exemption and the minor benefits exemption for meal entertainment when using this method. Chapters 1, 15 and 20 of the FBT guide talk have more info about these exemptions.


There's no need to let us know you're using the 50:50 method. Your business records should reflect this. Chapter 15 covers record keeping and reporting.


Not-for-profit employer charities registered with the ACNC and exempt from income tax may get various FBT concessions such as an exemption or rebate. These are subject to the capping threshold. You should check chapters 6.9 and 15.5 of the FBT guide to see when meal entertainment is excluded from the threshold.

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Most helpful reply

AriATO(Community Support)Community Support
27 Apr 2022

Hi @michaelwu


I'm back with some answers for you.


Based on what you've said, yes you can classify your tax-exempt body entertainment fringe benefits as meal entertainment fringe benefits. As long as there's no salary sacrifice and the benefits are provided by the employer and not anyone else.


If you choose to classify these benefits as such then you need to reclassify all fringe benefits in the FBT year that arise from giving meal entertainment. This must be done no later than the day your FBT is due or by 21st May if you don't need to lodge.


If you choose the 50:50 split, the taxable value is 50% of your total meal expenses. This includes expenses that would usually be exempt or not subject to FBT. You also won't be able to apply the property benefits exemption and the minor benefits exemption for meal entertainment when using this method. Chapters 1, 15 and 20 of the FBT guide talk have more info about these exemptions.


There's no need to let us know you're using the 50:50 method. Your business records should reflect this. Chapter 15 covers record keeping and reporting.


Not-for-profit employer charities registered with the ACNC and exempt from income tax may get various FBT concessions such as an exemption or rebate. These are subject to the capping threshold. You should check chapters 6.9 and 15.5 of the FBT guide to see when meal entertainment is excluded from the threshold.

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