Announcements
Worried you’re missing part of your refund? Remember, the low and middle income tax offset isn’t a refund on its own – it’s used to offset (or reduce) the amount of tax you pay. The offset amount you may be entitled to is automatically applied and could range between $255-$1080, depending on things like your taxable income and how much tax you’ve paid.
Still not sure? Ask the Community

ATO Community

Entertainment

This post is archived and may not be up-to-date.

Initiate

Views 923

Replies 2

Hi, 

I am bit confused with the tax treatment for expenses that might be categorized as Entertainment. If someone please help to clarify?

Every last Friday of the month, we have a light staff lunch at the business site; will this be classed as Entertainment? As per my understanding, this will be exempt property benefit and won't attract FBT, but it will not be income tax deductible and GST not claimable, am I correct? 

And if an employee meets up a client at a cafe and pays for the expenses, and company reimburses the employee later - I know the Client component will be entertainment nature and GST not claimable and Income Tax deduction not available; what about the employee component? Assume the expenses less than $100, this will fall under Exempt Minor Expense? No FBT? But still GST not claimable and Income Tax Deduction not available, am I correct? 

thanks! 

 

1 ACCEPTED SOLUTION

Accepted Solutions

Most helpful response

ATO Certified Response

Former Community Support

Replies 1

Hi @Sue83,

 

Thanks for your question!

 

It's probably worth your time having a good look through our Fringe Benefits tax guide for employers - you can find all of the information you need about all of the different types of fringe benefits in the pane on the left hand side.

 

There are a number of different factors that can determine whether this is going to be classified as an entertainment fringe benefit, or as an exempt benefit. From what you've described here, it sounds like it may be exempt, particularly since the food or drink is being provided to current employees on your business premises during working hours.

 

If your employee has met up with a client in a location outside of your business premises, this could potentially meet the criteria of an entertainment fringe benefit. However, because you have reimbursed the employee, this could change it to an expense payment fringe benefit instead.

 

Ultimately it is up to you to decide what the fringe benefit would be classified as, based on your circumstances and the information provided in our guides. You are correct in that if it is an exempt benefit, you cannot claim a deduction or a GST credit on those expenses.

 

You can also have a look at our guide on GST and employee reimbursements, which notes that you are not entitled to a GST credit if you reimburse non-deductible expenses, such as the portion of expenses relating to entertaining clients.

 

Generally speaking, expenses for food and/or drink are not tax deductible unless they formed part of meal expenses for overnight travel.

 

I hope this helps, but please let me know if there's anything else you'd like me to clarify.

 

Thanks,

 

Rachael B.

2 REPLIES 2

Most helpful response

ATO Certified Response

Former Community Support

Replies 1

Hi @Sue83,

 

Thanks for your question!

 

It's probably worth your time having a good look through our Fringe Benefits tax guide for employers - you can find all of the information you need about all of the different types of fringe benefits in the pane on the left hand side.

 

There are a number of different factors that can determine whether this is going to be classified as an entertainment fringe benefit, or as an exempt benefit. From what you've described here, it sounds like it may be exempt, particularly since the food or drink is being provided to current employees on your business premises during working hours.

 

If your employee has met up with a client in a location outside of your business premises, this could potentially meet the criteria of an entertainment fringe benefit. However, because you have reimbursed the employee, this could change it to an expense payment fringe benefit instead.

 

Ultimately it is up to you to decide what the fringe benefit would be classified as, based on your circumstances and the information provided in our guides. You are correct in that if it is an exempt benefit, you cannot claim a deduction or a GST credit on those expenses.

 

You can also have a look at our guide on GST and employee reimbursements, which notes that you are not entitled to a GST credit if you reimburse non-deductible expenses, such as the portion of expenses relating to entertaining clients.

 

Generally speaking, expenses for food and/or drink are not tax deductible unless they formed part of meal expenses for overnight travel.

 

I hope this helps, but please let me know if there's anything else you'd like me to clarify.

 

Thanks,

 

Rachael B.

Initiate

Replies 0

Thanks a lot for the clarifications Rachel! It really helped me to understand the basics and I will definitely have a studay of the Fringe Benefit Guide you have provided the link for.