Entertainment fringe benefits arise when an employer provides food, drink, or recreation to employees.
Common FBT Exemptions
| Exemption Type | Condition |
| Minor Benefit | Value < $300 and provided infrequently and irregularly. |
| Taxi Travel | Travel to or from work. |
| Food/Drink on Business Premises | Consumed by employees on a working day. |
Reducing FBT Liability
| Method | Description |
| Otherwise Deductible Rule | Provide benefits that would be tax deductible for employee (e.g. training). |
| Employee Contribution | Employees contribute to the cost (e.g. pay their own green fees). |
| Cash Bonus Instead | Pay a cash bonus (subject to income tax, not FBT). |
Classifying Entertainment Benefits
| Type of Benefit | Classified As |
| Theatre tickets reimbursed | Expense payment fringe benefit |
| Food and drink | Property fringe benefit |
| Accommodation/transport linked to entertainment | Residual fringe benefit |
| Entertainment by tax-exempt organisation | Tax-exempt body entertainment fringe benefit |
Valuation Methods for Entertainment
| Method | Details |
| Actual Value | Taxable value is the actual cost paid. Apportion per head if shared with clients. |
| 50:50 Split (Meal Entertainment) | 50% of total expenditure is subject to FBT. |
| 12-week Register | Use a 12-week log to calculate employee-related share. |
Claiming Deductions and GST Credits
| Scenario | Tax Treatment |
| FBT Paid on Entertainment | Deductible and eligible for GST credit (GST-exclusive basis). |
| Exempt Benefits | Not deductible or eligible for GST credits. |
| Entertainment for Clients Only | Not subject to FBT and generally not deductible. |
| Income Tax Exempt Organisations | Cannot claim income tax deductions. |
Record Keeping Requirements
| Required Record | Purpose |
| Date of entertainment | To identify timing for FBT year. |
| Recipient (employee, associate, client) | To determine FBT liability. |
| Cost of entertainment | To calculate taxable value. |
| Type and location of entertainment
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To determine applicable valuation and exemption.
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