ATO FBT Online Guide

The Australian Tax Office (ATO) has published a new web only product to help Not for Profit employers and fringe benefits tax (FBT) administrators understand FBT and entertainment.

Called Fringe benefits tax (FBT) and entertainment guide for non-profit organisations It outlines the steps to follow if your organisation provides food, drink or recreation to employees.

It also includes practical examples and tables to make it easier to decide which events are likely to be classified as entertainment, and whether or not there will be an FBT liability.

The online guide has been developed for NFP organisations which are either wholly exempt or partially exempt from income-tax.

Topics include:
– Is the provision of food and drink entertainment?
– Meal entertainment exemption for public benevolent institutions (PBIs) and Health promotion charities (HPCs).
– Minor benefits and other exemptions.
– How to calculate the taxable value of entertainment.
– How to reduce your FBT liability.
– Common entertainment scenarios.
– Reporting on employee payment summaries.

This guide helps organisations who to understand how FBT and entertainment works and to decide whether or not they may have to pay FBT.

The tables and examples in this guide provide assistance to organisations who provide their employees with food and drink, or leisure activities. Depending on the circumstances their provision may be classified as entertainment and possibly incur an FBT liability.
The online publication helps
– identify when an event is likely to be classified as entertainment
– decide whether your organisation has an FBT liability
– calculate the taxable value of entertainment benefits using the actual method,
– keep records so that you can calculate your organisation’s FBT payable.

It also:
– explains how you can reduce your organisation’s FBT liability, possibly to nil,
– provides some examples of common situations in which entertainment is provided by non-profit organisations.

The ATO says FBT treatment of providing entertainment to employees (and their associates) of tax-exempt organisations is different to those of income tax paying organisations.

There are different rules for tax-exempt organisations when it comes to the provision of entertainment because they do not pay income tax.

To access the online guide go to:
www.ato.gov.au/nonprofit/content.asp?doc=/content/00108227.htm