Want to know more about Employee Entertainment Benefits?
Salary packaged entertainment benefits give eligible employees the option to spend pre-tax income on two types of benefits: meal Entertainment and entertainment facility leasing expense benefits (EFLE). Salary packaging or salary sacrifice allows an employee to forgo future salary in exchange for benefits of a similar value.
Meal Entertainment covers the food & beverage expenses for two or more persons dining out at a restaurant, bistro or café; locally or overseas. The meal must be the primary entertainment activity and must also be consumed on the premises where purchased.
EFLE covers the costs of holiday accommodation (hotels, motels or a holiday house), car hire while on holiday and hire of a private function room or reception venue; locally or overseas.
Changes made from 1 April 2016 to not-for-profit employees
From 1 April 2016 employees of not-for-profits will have seen a large decrease in the amount of salary packaged meal entertainment expenses available before fringe benefits tax applied. Traditionally, such employees could salary package an unlimited amount of meal entertainment benefits with no fringe benefits tax implications. This drastic change means that salary packaged meal entertainment is certainly not as good as it used to be, but it hasn’t lost all of its perks.
For the fringe benefits year beginning 1 April 2017 to 31 March 2018, the maximum cash value of the Entertainment Benefit is capped at $2,403 for GST inclusive meal entertainment or $2,650 for GST exclusive meal entertainment per FBT year. The cap value can be spread between the two Entertainment Benefits however it cannot exceed the caps; For example, if an employee elects $2,403 of GST inclusive EFLE, $0 will be allocated for Meal Entertainment.
The Entertainment benefits are Reportable Fringe Benefit Tax Amounts (RBFA). This means that if the taxable value of the benefit exceeds $2,000, it will be listed on your PAYG Payment Summary at the end of the financial year. This can have an effect on Centrelink and other government benefits. For example, if an employee chooses to receive $2,403 of entertainment benefits in the 2018 FBT year, this amount exceeds $2000 and will need to be grossed up by multiplying the total cash benefit received by the FBT gross-up rate of 1.8868. Therefore, the grossed up value displayed on the PAYG Payment Summary will be ($2,403 x 1.8868) $4,534.
For a successful expense claim for an Entertainment Benefit, you will need to keep your receipts & invoices to verify your expenses.
Remember that Entertainment Benefits fall under Fringe Benefit Tax (FBT) law. The FBT year commences on 1 April and ends 31 March. These dates are important as you need to make sure that you spend your allocated funds before the end of the FBT year.
Contact one of our Tax Specialists for more information on salary packaged entertainment benefits.