We would like to remind you that the concessional fringe benefits tax (FBT) treatment of meal entertainment and entertainment facility leasing expenses provided to employees by way of a salary packaging arrangement will cease from 1 April 2016. Both of these items are referred to as “meal entertainment benefits” for the purposes of this new measure, and the changes that apply are as follows:
Meal entertainment benefits provided by not for profit (NFP) employer will be subject to a separate capping threshold of $5,000 per employee per FBT year. This equates to a pre-grossed up amount of $2,550 where the NFP employer is unable to claim the GST included in the meal entertainment benefits as an input tax credit.
If the grossed up value of meal entertainment benefits exceeds $5,000 then the excess can be applied towards the balance of an employee’s separate capping threshold of either $17,667 or $31,177 (depending on the type of NFP employer). If an excess still remains then this will be subject to FBT at the full rate of 49%.
All use of salary packaged meal entertainment benefits will become reportable on employees’ PAYG payment summaries. If the meal entertainment benefit is not salary packaged (for example, costs associated with a Christmas party) then it will not be reportable.
The concessional valuation rules (i.e. the 50/50 split method or the 12-week register method) can no longer be used for salary packaged meal entertainment benefits.
Although salary packaging arrangements can be complicated, many legitimate and tax-effective arrangements still remain and are available to be utilised. You should not hesitate to contact Murray Nicholls of our office if you require FBT advice or would like to discuss further any issues in relation to your salary packaging arrangements.