As an employer, offering employee benefits is a great way to attract and retain top talent. However, it's important to understand the tax implications of these benefits, particularly when it comes to entertainment. Talk to us to find out what you need to know about Fringe Benefit Tax (FBT) and entertainment for employee benefits:
1. What is Fringe Benefit Tax (FBT)?
Fringe Benefit Tax (FBT) is a tax paid by employers on certain benefits they provide to their employees, in addition to their salary or wages. This can include things like company cars, health insurance, and entertainment.
2. Entertainment and FBT
When it comes to entertainment, the FBT rules can be complex. In general, if you provide entertainment to your employees as part of their employment, it will be subject to FBT. This can include things like corporate events, tickets to shows or sporting events, and meals or drinks.
3. Exceptions to FBT for Entertainment
There are some exceptions to FBT for entertainment. For example, if the entertainment is provided to all employees on an equal basis, or if it's incidental to the main business purpose of the event, it may not be subject to FBT. It's important to seek professional advice to ensure that your entertainment offerings comply with the FBT rules.
4. Entertainment and Income Tax
In addition to FBT, entertainment benefits may also be subject to income tax for the employee. If the entertainment benefit is not subject to FBT, it may still be subject to income tax for the employee. This means that the value of the benefit may need to be included in the employee's taxable income.
5. Managing FBT and Entertainment
To manage FBT and entertainment benefits effectively, it's important to have clear policies and procedures in place. This includes defining what entertainment benefits are offered, who is eligible, and how they will be provided. You should also ensure that all benefits are properly recorded and reported, and that you seek professional advice if you're unsure about the tax implications of any benefits.
In conclusion, offering entertainment benefits to your employees can be a great way to enhance your employment offerings. However, it's important to understand the tax implications of these benefits.
