A tax-exempt body entertainment fringe benefit may arise from entertainment expenses incurred by you if either:
- you are wholly or partially exempt from income tax
- you did not derive assessable in come from the activities to which the entertainment relates.
If you are an income tax exempt employer, you may choose to value meal entertainment not provided under a salary packaging arrangement using the valuation rules applicable to meal entertainment fringe benefits. If so, you must include the benefits on the return at item P 'Meal entertainment'.
If you provide the entertainment under a salary packaging arrangement, you cannot choose to value it as a meal entertainment fringe benefit.
If you are not exempt from income tax and you provided entertainment, this may give rise to a fringe benefit.
Do not value a benefit of this type in this category – instead, establish the taxable value as an expense payment, property or residual fringe benefit, depending on how you provided the benefit. Alternatively, you can value meal entertainment as a meal entertainment fringe benefit.
Example 19: Taxable value of income tax exempt body – entertainment fringe benefits
You are a local council that provides a Christmas function for your employees on your premises. You provided finger food and your employees' spouses attended. You did not elect to value the meal as a meal entertainment fringe benefit.
The value of the tax-exempt body entertainment fringe benefit is $5,000.
You would write at item 23: