Entertainment – Tax Exempt Body Entertainment Fringe Benefits


Entertainment provided to employees or their associates by the University is subject to FBT. Since the University is income tax exempt, this benefit is known as a ‘tax exempt body entertainment fringe benefits’.

To enable the correct FBT and GST treatment for expenditure on entertainment, staff should refer to the entertainment policy Incurring Entertainment Expenditure.

Defining Entertainment

For a fringe benefit to arise there must be entertainment, provided in the form of food, drink or recreation. It includes associated travel and accommodation to facilitate such entertainment. Common examples include staff social functions, business lunches, sporting events or theatre tickets.

The following points may assist in determining what entertainment is:

  • Entertainment is only subject to FBT if it involves employees and associates eg spouses. Entertainment of clients or others is not subject to FBT
  • Morning and afternoon teas and light meals (no alcohol) consumed at the University on a working day are not entertainment and therefore no FBT is payable; but if alcohol is provided, the total cost of the meal and alcohol is subject to FBT (Tax Ruling IT 2675)
  • Social events that include staff and non staff events (i.e. visiting academics) will not be subject to FBT when the benefit provided to staff is regarded as a minor benefit (benefits of small value and they are infrequent or irregular and have a value less than $300)
  • Christmas parties and other entertainment provided to staff are subject to FBT including the function cost and any travel associated
  • Where a staff member is undertaking business travel, and the University reimburses the meal cost including alcohol, no part of the meal cost is subject to FBT. Where the employee on business travel also pays the associate’s meal, this is subject to FBT as it is entertainment.

Meal Entertainment Fringe Benefits

Where a tax-exempt body entertainment fringe benefit arises from the provision of meal entertainment, employers may choose to classify these fringe benefits as ‘meal entertainment fringe benefits’.

If you chose to classify a fringe benefit as a meal entertainment fringe benefit, you have to classify all fringe benefits arising from the provision of meal entertainment during the FBT year as meal entertainment fringe benefits.

Specifically, the provision of meal entertainment fringe benefits means:

  • Providing entertainment by way of food or drink
  • Providing accommodation or travel connected with such entertainment
  • Paying or reimbursing expenses by an employee for the above
  • The provision of meal entertainment does not include the provision of entertainment by recreation

You cannot include meal entertainment provided by someone other than you in the election. This means that if a fringe benefit arises by someone other than you, you must calculate the taxable value the fringe benefit according to the rules for that type of fringe benefit i.e. expense payment, residual or tax-exempt body entertainment fringe benefit.

Taxable Value

The taxable value of the benefit is the amount of the actual expenditure incurred. The taxable value cannot be reduced by contributions that may be made by an employee. If you cannot determine the actual expenditure, a ‘per head’ basis can be used for apportionment.

If you elect to value the food, drink and associated accommodation or travel as ‘meal entertainment’, the per basis of apportionment cannot be used.


There are only very limited circumstances under which an exemption will apply to the provision of food and drink. The most common are as follows:

  • Morning and afternoon teas and light meals
  • Meals provided to staff at an in-house dining facility
  • In-house recreational facilities

Morning and afternoon teas

Providing morning and afternoon tea or light meals to staff on the University’s premises is not entertainment.

Morning and afternoon tea includes light refreshments such as tea, coffee, fruit drinks cakes and biscuits, but does not include alcohol.

Light meals include sandwiches and other hand food, salads and orange juice that are intended to be, and can be, consumed on premise. As light meals can be more elaborate, they take on more characteristics of entertainment.

Food and drink provided in an in-house dining facility

No FBT is payable in respect of food and drink provided in an in-house dining facility which is located on the University’s premises. An in-house dining facility is defined as a canteen, dining room or similar facility which is operated wholly or principally for providing food and drinks on working days to employees, and is not open to the public. The exemption is not available to the former University Club, now Isabella Restaurant as the premises are open to the public.

In-house recreational facilities

Recreation facilities located on the University’s premises when provided to employees are not subject to FBT. Examples include gymnasiums, tennis courts and games rooms.