I am seeking clarification regarding the FBT implications where a tax-exempt body employee receives a gift or concert ticket directly from a third party (was not provided by an associate of the employer or under an arrangement between the third part and the employer). Do you know when the employee receive the gift, whether it will give rise to an FBT liability for the tax-exempt body?
Hi @JuniorH1506,
An employer typically isn't liable for FBT when an employee receives a gift or benefit directly from a third party, if the third party isn't an associate of the employer and the benefit wasn't provided under an arrangement between the third party and the employer. In this case, the gift or concert ticket wouldn't give rise to an FBT liability for the tax-exempt body employer.
FBT applies when an employer provides a benefit to an employee (or their associate) in respect of their employment. The key factor is whether the employer provided the benefit or arranged for it to be provided. When a third party gives a gift directly to an employee without any involvement or arrangement with the employer, there's no fringe benefit provided by the employer.
This applies regardless of whether the employer is a tax-exempt body or a commercial business. The tax-exempt body provisions that affect entertainment benefits don't change the fundamental requirement that the employer must be providing or arranging the benefit for FBT to apply.
If you're unsure whether an arrangement exists between the third party and your organisation, you should review any agreements, understandings or policies that might indicate the employer facilitated or requested the third party to provide these benefits.
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