Keeping track of employee benefits | KPMG | AU

That's entertainment: keeping track of employee benefits

Keeping track of employee benefits

Daniel Hodgson examines how employers can stay on top of the entertainment benefits provided to their employees.

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Partner, Expatriate Tax

KPMG Australia

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Horse race

That's Entertainment was a fine 1981 track from UK chart-toppers, The Jam, but as thoughts start to turn to the tracks at Flemington and elsewhere, employers would do well to stay on top of the entertainment benefits provided to staff.

The key to being able to optimise the fringe benefits tax (FBT) consequences of your employees attending racing carnivals and similar events is to keep contemporary records of who is receiving tickets or attending corporate enclosures. Easier said than done, but we recommend working closely with corporate events teams to capture as much information as possible.

This enables the employer to identify how much has been spent on employees, as opposed to clients and suppliers and, importantly, on which employees. Then employers need to draw some distinctions between the different types of entertainment that may be received.

A ticket to a public area or specific seat in the grandstand would typically be added to the total of reportable benefits on the employee’s payment summary, and ineligible for any 50/50 safe harbour valuation. 

There are different consequences of attending a marquee which the employer has hired for its exclusive use. This would not be added to reportable benefits, as it is a so-called entertainment facility leasing expense (EFLE). The employer may elect to calculate FBT on EFLE benefits using a 50/50 safe harbour approach. Technically, the element of marquee expenditure that relates to food and drink is eligible for a separate 50/50 safe harbour election, and is also not part of reportable benefits for the payment summary.

It is worth remembering that travel and accommodation costs incurred in connection with the provision of entertainment should also be counted as part of the benefit for FBT purposes.

Finally, where an employee receives a benefit with a goods and services tax (GST) inclusive value of less than $300, this may be eligible for the minor benefits exemption. Assessing eligibility requires consideration of how often the employee receives similar benefits, and the circumstances in which they receive it.

Enjoy the carnivals!

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