Fringe Benefits Tax – A Guide For Employers

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A taxable fringe benefit will arise in respect of a co-employee of a worker who attends the party if not otherwise exempt under the small benefits exemptions (make reference to sections 20.8 of Fringe benefits taxes exempt benefits). The minor benefits rules that apply to Christmas parties are no not the same as those that apply to every other benefits. Where you give a Christmas party for your employees and their companions you do not add the costs collectively but instead take a look at the price of the benefit provided to each individual.

300 may be considered a minor advantage and exempt if certain conditions are met (make reference to sections 20.8 of Fringe benefits tax exempt benefits). The small benefits exemption can apply if you use the 12-week register way for valuing meal entertainment benefits. All benefits associated with the Christmas function is highly recommended separately to the Christmas party when contemplating the minimal benefits exemption.

For example, the cost of gifts such as bottles of wine and hampers given at the function should be looking at separately to determine if the minor benefits exemption applies to these benefits. The cost of providing a Christmas party is income tax deductible only to the extent that it is subject to FBT.

Therefore, any costs that are exempt from FBT (that is, exempt minimal benefits and exempt property benefits) can not be claimed as an income tax deduction. The expenses of entertaining clients aren’t at the mercy of FBT and aren’t tax deductible. A Christmas party provided to current employees on your business premises or worksite on a working day may be an exempt advantage. The cost of associates participating in the Christmas party is not exempt. In the event that you provide drink or food, including some alcoholic beverages, to your worker while they are on business travel immediately, this is not the provision of entertainment generally.

Food or drink provided in these circumstances is, therefore, not meal entertainment, but will be a cost payment or a house fringe advantage. The ‘otherwise deductible’ rule applies to decrease the taxable value of the trouble payment or property fringe advantage to nil. If excessive alcohol is provided to employees while they may be on business travel immediately, the provision of the meals or drink is known as entertainment. The provision of meals to employees while they may be on business travel overnight is also entertainment if they receive entertainment in conjunction with their meal, such as attending a floor show. The reimbursement of the food expenses does not total entertainment and would be income tax deductible to the company.

Therefore, the reimbursement of the foodstuffs is not meal entertainment, but is an expenditure payment fringe advantage. The taxable value of the meals is reduced to nil because the foodstuffs would have been ‘usually deductible’ to the employees. Your expenses on food or drink that is reasonably incidental to your employees’ attendance at a continuing professional development (CPD) seminar that applies to at least four hours, is deductible and is not entertainment. The power is an expense payment or property fringe benefit either.

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Where the food or drink is provided on your premises, it is normally a property advantage and the house exemption may apply. If the food or drink is not provided on your premises, it can be an expenditure payment or property fringe advantage either. However, the ‘otherwise deductible’ rule may connect to decrease the value of the fringe benefit. How does the ‘in any other case deductible’ rule apply? In case your employee would have been able to claim money taxes deduction for the price of attending the workshop acquired it been incurred by the worker (and not reimbursed by you), the in any other case deductible guideline applies the following.

CPD seminar that’s not at least four hours in the period, only that percentage of the enrollment fee which will not relate to the food or drink would have been deductible and FBT will apply. Does the type of seminar change lives? A workshop is any workout, including a meeting, convention, lecture, reaching, speech, answer, and question session or educational course. A business meeting, where the main purpose of the meeting is to provide or receive information, or discuss matters relating to the business is not treated the same manner as those described as ‘certain business seminars’.