While there are some exceptions that apply to meals provided to employees, there are many situations where the provision of food and drink to an employee or their associate is subject to FBT.
The risk of FBT applying increases when you are entertaining, rather than just proving sustenance. For example, food and drink provided at a social function or in a restaurant generally has the character of entertainment and will normally be subject to FBT.
The main exceptions from FBT in relation to food and drink are where the meal is consumed by an employee while travelling for business purposes or where the meal is consumed on the employer's business premises (for example, a working lunch in the office).
Food and drink provided to employees and their associates at a Christmas party or other special occasion can be exempt from FBT if the cost per head is under $300.
The advantage of having food and drink being subject to FBT is that the costs are generally deductible and GST credits can be claimed. Food and drink that gives rise to entertainment but is not subject to FBT is not deductible to the business.
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Last updated April 2013. This article is provided for information purposes only and should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.
This article is provided for information purposes only and correct at the time of publication. It should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.