Connolly's Accounting Services | Beware of the ATO Grinch Coming to your Party!
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Beware of the ATO Grinch Coming to your Party!

Beware of the ATO Grinch Coming to your Party

Except in limited circumstances, deductions are generally not allowable for entertainment expenses.

‘Entertainment’ is defined in s32-10 as:

(a)        entertainment by way of food, drink or recreation, or

(b)        accommodation or travel to do with providing entertainment by way of food, drink or recreation.

 

Below is a summarization list to be aware this year

 

Benefits Provided FBT Liability Income Tax Deduction GST Claim
Christmas party/Meal Entertainment
Food & Drink Provided on Business Premises

   Employees

        Property Fringe Benefit (actual)

   Associates

        Property Fringe Benefit (actual)

        Minor Benefit

   Clients

 

 

 

No(1)

 

Yes(2)

No(3)

No

 

 

No

 

Yes

No

No

 

 

No

 

Yes

No

No

Off Premises (eg; restaurant)

   Employees and / or associates

       Property, expense payment or residual fringe benefit (actual)

       Minor Benefit

   Clients

 

 

Yes(2)

No(3)

No

 

 

Yes

No

No

 

 

Yes

No

No

Taxi Fares: Property or Expense Payment Fringe Benefit

   Employees

       From work premises to function (or vice versa)

       From Function to non-work premises (or vice versa)

       Minor Benefit (if not exempt taxi travel)

  Associates

      Any taxi travel (irrespective of origin or description)

      Minor Benefit

 

 

No(4)

Yes(2)

No(3)

 

Yes

No(3)

 

 

No

Yes

No

 

Yes

No

 

 

No

Yes

No

 

Yes

No

Gifts      
If Gifts constitutes ‘entertainment’ to;

  Employee or Associate.

      Property Fringe Benefit (actual)

      Minor Benefit

  Client / Customer

 

 

Yes(2)

No(3)

No

 

 

Yes

No

No

 

 

Yes

No

No

If Gift(s) not  constitutes as  ‘entertainment’ to;

  Employee or Associate.

      Property Fringe Benefit (actual)

      Minor Benefit

  Client / Customer

 

 

Yes(5)

No(3)

No

 

 

Yes

Yes

Yes

 

 

Yes

Yes

Yes

  1. Exemption under s.41 FBTAA – provision of food and drink on premises on a working day. Applies if actual method used.
  2. As this expenditure constitutes ‘meal entertainment’, business may elect to apply the 50/50 split or 12 week register method to value fringe benefits (FB). The relevant income tax and GST implications follow.
  3. Minor benefit exemption under s58 FBTAA – must be less than $300 per benefit and satisfy relevant criteria. See   TR 2007/12 applies only if “actual” method used.
  4. Exemption under s58Z FBTAA. Not applicable to associates of employees, applies only if the ‘actual method is applied
  5. Must Value using actual method only
Adrian Connolly
Adrian Connolly
cas@connollysaccounting.com.au

Adrian Connolly is a FIPA (Fellow Institute of Practicing Accountants), a member of NTAA (National Tax & Accountants Association) and holds a Bachelor of Business (Accounting) from La Trobe University. Adrian had more than 10 years’ experience in the primary production industry, in Sheep, Cropping Beef and Dairy. In 2001 Adrian completed his Accounting Degree and has been working as a Public Accountant based in the Goulburn Valley. As a sole Practitioner, Adrian is helped by his wife Janine in the Office Administration: Secretarial, Receptionist, Scanning Documents and Data Entry.

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