Private ruling: FBT - meal entertainment - public benevolent institution
Published: June 2012
Ruling period: 1 April 2011 - 31 March 2014
Date scheme commenced: 1 April 2010

Ruling: Q1: Will the value of the reimbursement of restaurant meals provided to an employee be included in the employer's aggregate non-exempt amount? | A1: No

Relevant facts and circumstances: You are a non-profit organisation and have been endorsed as a Tax Concessions Charity and Public Benevolent Institution (PBI) You intend to enter into an effective salary sacrifice arrangement (SSA) with your employees for the payment of restaurant meals. The employees have already sacrificed their salary to the maximum allowed. That is, grossed up amount to $30,000. The employees obtain invoices for the meals and are reimbursed by you.

Relevant legislative provisions: Fringe Benefits Tax Assessment Act 1986 Subsection 5B(1D) | Fringe Benefits Tax Assessment Act 1986 Subsection 5B(1E) | Fringe Benefits Tax Assessment Act 1986 Subsection 5B(1L) | Fringe Benefits Tax Assessment Act 1986 Subsection 57A(1) | Fringe Benefits Tax Assessment Act 1986 Subsection 123C(1) | Fringe Benefits Tax Assessment Act 1986 Subsection 123C(5) | Fringe Benefits Tax Assessment Act 1986 Section 136(1)

Reasons for decision: Summary: Section 57A of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) provides that certain employers are generally exempt from fringe benefits tax on benefits provided to employees. Specifically subsection 57A(1) of the FBTAA states: Where the employer of an employee is a public benevolent institution endorsed under subsection 123C(1) or (5), a benefit provided in respect of the employment of the employee is an exempt benefit. Therefore as you are a PBI benefits provided to your employees will be exempt benefits. However, subsection 5B(1D) of the FBTAA provides that for PBIs, the employers fringe benefits taxable amount will include the employer's aggregate non-exempt amount. The method for calculating the employer's aggregate non-exempt amount is contained in subsections 5B(1E) to 5B(1L). These subsections provide that a PBI will only be liable to pay fringe benefits tax on the amount the grossed-up value of the benefits provided to an individual employee exceeds $30,000. However, not all benefits are included in the calculation. Under subsection 5B(1L) the calculation will not include benefits: · that constitute the provision of meal entertainment · that are car parking fringe benefits, or · whose taxable values are wholly or partly attributable to entertainment facility leasing expenses. In your situation you will be reimbursing your employees for the cost of restaurant meals. | Detailed Reasoning - Will the reimbursement of restaurant meals constitute meal entertainment?: The provision of benefits that constitute the provision of meal entertainment are exempt from FBT when provided by PBIs. | Detailed Reasoning - Providing meal entertainment means:: · providing entertainment by way of food or drink · providing accommodation or travel connected with such entertainment, or · paying or reimbursing expenses incurred by an employee for the above. As you will be reimbursing the cost of the restaurant meals you will be providing meal entertainment. | Detailed Reasoning - Conclusion: Where you reimburse your employees' for the cost of restaurant meals you are providing meal entertainment fringe benefits. However, these benefits are specifically excluded from the calculation of an employer's aggregate non-exempt amount and therefore not subject to fringe benefits tax.

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