ATO ID 2009/141: Entertainment facility leasing expenses: hire of a marquee
Date of decision: 9 October 2009
Year of income: Year ended 31 March 2010
Business line: Superannuation and Employer Obligations

Issue
Where an employee hires a marquee for use at the employee's home for the purpose of the provision of entertainment, is the marquee a 'facility' as that term is used in the definition of 'entertainment facility leasing expenses' under subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)?

Decision
Yes. The marquee is a 'facility' as that term is used in the definition of 'entertainment facility leasing expenses' under subsection 136(1) of the FBTAA.

Facts
The employer of the employee is a public hospital. The employee has incurred expenses on hiring a marquee to be constructed at the employee's home for a family wedding celebration. The expenses are incurred 'for the purpose of the provision of entertainment' as those words are used in the definition of 'entertainment facility leasing expenses' under subsection 136(1) of the FBTAA. The employer reimburses the employee for the expenses incurred in hiring the marquee, which includes the costs of set-up and removal. This reimbursement is not provided under a salary packaging arrangement. No part of the expenses incurred is for the provision of food, drink or advertising.

Reasons for decision
Summary: For employers that are public hospitals subject to the provisions of section 57A of the FBTAA, benefits provided to employees whose taxable values are wholly or partly attributable to entertainment facility leasing expenses are not subject to fringe benefits tax. This is provided the benefits have been not provided to an employee under a salary packaging arrangement. Refer also to ATO Interpretative Decision ATO ID 2009/45. Under the definition of 'entertainment facility leasing expenses' in subsection 136(1) of the FBTAA, expenses incurred by a person must be the hire or lease of a corporate box, boat, plane or other premises or facilities for the purpose of the provision of entertainment. A marquee is a temporary structure which can be used to accommodate people for dining and other purposes. In the current example a marquee is used to hold a wedding reception at the employee's home. Other examples might include a marquee used for entertaining corporate guests at a sports event; for the display of goods at a trade show; to house guests and staff at a fashion show. Whilst the term 'facility' is not defined in the FBTAA it is used in conjunction with other definitions such as: Similarly, the term 'facility' is used in the Income Tax Assessment Act 1997 (ITAA 1997) including instances where a facility is used for recreation purposes. The word 'facility' is defined in the Macquarie Dictionary (Multimedia version 5.0.0) to mean: facility noun (plural facilities) 1. something that makes possible the easier performance of any action; advantage: transport facilities; to afford someone every facility for doing something . 9. a building or complex of buildings, designed for a specific purpose, as for the holding of sporting contests. The word 'facility' is also defined in the Butterworths Encyclopaedic Australian Legal Dictionary , (Online Edition), LexisNexis Australia: Facility A building or appliance, designed for a specific purpose, which has the effect of making possible the easier performance of an action The word facility, as described in each dictionary definition above, and as used in the income tax and fringe benefits tax definitions above is of wide meaning. It is accepted that the term 'facility' as it is used in the definition of 'entertainment facility leasing expenses' also has a wide meaning that includes buildings, part of buildings or other structures that is used for the purpose of the provision of entertainment. In the present case the marquee is a temporary structure that has been hired and used for a wedding reception. The marquee is used for the purpose of the provision of entertainment. The marquee is a 'facility' as that term is used in the definition of 'entertainment facility leasing expenses' under subsection 136(1) of the FBTAA Note - The Tax and Superannuation Laws Amendment (2015 Measures No. 5) Act 2015 made changes to the FBTAA to limit the concessional fringe benefits tax treatment of entertainment benefits provided under a salary packaging arrangement. These amendments provide that from 1 April 2016 the method statement in subsection 5B(1L) no longer disregards the provision of meal entertainment or entertainment facility leasing expenses provided under a salary packaging arrangement. However, the amendments also introduced a separate cap for employers subject to the provisions of section 57A such that salary packaged entertainment benefits will continue to be exempt from fringe benefits tax where the grossed-up taxable value of these benefits do not exceed $5,000 for an employee in a FBT year. The amount of those benefits exceeding that separate cap will be included in calculating if the value of all benefits an employee receives exceeds the general exemption or rebate caps.

Legislative references: Fringe Benefits Tax Assessment Act 1986 section 57A subsection 136(1)
Related ATO interpretative decisions: ATO ID 2009/45
Other references: Explanatory Memorandum to the Taxation Laws Amendment (2015 Measures No. 5) Bill 2015 Macquarie Dictionary (Multimedia version 5.0.0) Encyclopaedic Australian Legal Dictionary (Online Edition), LexisNexis Chapter 6.5 of the Fringe Benefits Tax - A Guide for Employers
Subject references: Entertainment expenses Entertainment facility leasing expenses Excluded fringe benefits Exempt benefits Expense payment fringe benefits FBT entertainment FBT expense payment Fringe benefits Fringe benefits tax