| FBT and Entertainment |
| Do you know when you have been entertained? We can?t comment how successful somebody?s attempt to entertain you have been, but this is an element of the Australian Taxation Office(ATO) tests for food and drink expenses to be subject to FBT. |
The ATO considers that entertainment is provided when the food and drink confers an entertainment on the recipient. This needs an objective analysis of all the circumstances, including:-
What type of food is provided
Morning and afternoon teas provided to staff on a work day on the employer?s premises or worksite, or light working lunch do not constitute entertainment. More elaborate meals, such as working lunches, do confer entertainment and therefore fall within the definition of entertainment in s.51AE.
When food and drink is provided
Provision of food during work time, overtime or whilst travelling are less likely to have the character of entertainment, as this type of meal usually does not go beyond providing mere sustenance.
Where the food and drink is provided
Food and drink provided on work premises is less likely to have the character of entertainment, whilst food and drink provided at a hotel, restaurant, etc., or consumed with other forms of entertainment is more likely to have such a character.
Why the food and drink is provided
The purpose test requires an evaluation of the reason for the provision of the relevant food and drink. Where the purpose is to entertain, the food and drink will adopt a character of an entertainment meal.
An element of entertainment is required before the provision of food and drink becomes an ?entertainment meal?.
What?s more, what is entertainment to one person can be boredom to another. The answer is therefore only known at the time ? making notes on the credit card voucher would be a good idea.
27th-January-2004 |
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