Christmas parties, Friday night drinks, long lunches. Who doesn’t enjoy participating in workplace festivities. But at what cost? March is our FBT in focus month and while the end of year Christmas party is long behind us the hangover of Fringe Benefits Tax is not.
Here are a few tips and traps to help you navigate the long and winey road of meal entertainment.
Decisions, decisions… When deciding whether food or drink is meal entertainment we apply the Why, What, When, Where rule.
Why – Why is the food being provided? We’re looking to determine purpose here. Is the food and drink for sustenance or refreshment? Or is it in a social situation? Generally speaking, if the food and drink is provided for enjoyment in a social situation it is more likely to be classified as meal entertainment. Conversely, food or drink for refreshment or sustenance will generally not be captured under the provisions.
What – What kind of food or drink is being provided? Generally, the more elaborate the meal the more likely the meal is to be meal entertainment. For example, morning or afternoon tea or light lunches generally don’t take on the characteristics of meal entertainment.
When –Food or drink provided during overtime and during work hours is generally for work related purposes. Food and drink provided outside of work hours is more likely to be for entertainment purposes.
Where – Work premises or out for lunch? Food and drink consumed on work premises is more likely to be for work purposes. Food and drink consumed off site is generally captured under the meal entertainment provisions.
Here are some examples to help you with common scenarios:
No one likes a wine tax, and no one likes an audit either, so if you think your expenses fall under the meal entertainment provisions, talk to us about FBT.
Author – Simone Hill