An employer which is wholly or partly exempt from income tax is a ‘tax exempt body’.
Because income tax is not paid, there are specific FBT rules which apply to tax-exempt bodies.
The ‘tax-exempt body entertainment fringe benefit’ only applies to non-deductible entertainment. To determine this, a non-taxable entity has to consider whether the expense would be deductible, if the organisation was not tax exempt.
Cap on entertainment: From 1 April 2016 – a separate grossed-up cap of $5,000 applies for salary-sacrificed meal entertainment benefits, with the excess to be counted in calculating the existing FBT exemption or rebate cap. Meal entertainment benefits will be reportable. See: Enabling legislation – passed 25 November 2015
An ‘entertainment‘ benefit may be any of
- food, drink or recreation
- accommodation or travel in connection with such entertainment, or
- paying or reimbursing expenses incurred in obtaining something covered by the above
For more about what is entertainment see Entertainment Fringe Benefits
- ATO – Salary packaged meal and other entertainment benefits
- FBT and entertainment for non-profit organisations
- Common entertainment scenarios
This page was last modified on 29 February 2016