Class Ruling

CR 2007/88A1 - Addendum

Fringe benefits tax: employer clients of Shakespeare & Associates who are subject to the provisions of section 57A of the Fringe Benefits Tax Assessment Act 1986 whose employees make use of a Visa Salary Packaging Card (Meal Entertainment) facility

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Addendum

This Addendum is a public ruling for the purposes of the Taxation Administration Act 1953. It amends Class Ruling CR 2007/88 to take account of the application of the Tax and Superannuation Laws Amendment (2015 Measures No. 5) Act 2015 to the concessional treatment of meal entertainment and entertainment facility leasing expense benefits provided under a salary packaging arrangement from 1 April 2016.

CR 2007/88 is amended as follows:

1. Paragraph 2

Omit:

•

subsection 5B(1E) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA);

•

paragraph 5E(3)(a) of the FBTAA;

•

section 37AD of the FBTAA; and

•

section 57A of the FBTAA.

Substitute:

•

section 5B of the Fringe Benefits Tax Assessment Act 1986 (FBTAA);

•

paragraph 5E(3)(a) of the FBTAA;

•

Division 9A of Part III of the FBTAA;

•

section 37AC of the FBTAA;

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section 37AD of the FBTAA;

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section 38 of the FBTAA;

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section 39 of the FBTAA;

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section 57A of the FBTAA; and

•

Part XIB of the FBTAA.

2. Paragraph 24

Before the paragraph; insert:

Salary packaged meal entertainment benefits provided on or before 31 March 2016

23A. Paragraphs 24 to 27 of this Ruling (and paragraphs 28 to 35 of the Explanation section) apply to benefits provided on or before 31 March 2016 and refer to provisions in the FBTAA before the application of the Tax and Superannuation Laws Amendment (2015 Measures No. 5) Act 2015.^[1]

3. Paragraph 27

After the paragraph, insert:

Salary packaged meal entertainment benefits provided from 1 April 2016

27A. Paragraphs 27B to 27J of this Ruling (and paragraphs 28 to 32, 35A to 35D of the Explanation section) apply to benefits provided from 1 April 2016 and refer to provisions in the FBTAA following the application of the Tax and Superannuation Laws Amendment (2015 Measures No. 5) Act 2015.

27B. The use of the card for the acquisition of entertainment by way of food or drink constitutes the 'provision of meal entertainment' as defined in section 37AD.

27C. The provision of meal entertainment by way of the card gives rise to an exempt benefit under section 57A.

27D. The benefit is a 'tax-exempt body entertainment benefit' under section 38 and the taxable value of the fringe benefit is determined under section 39.

27E. The meal entertainment is provided under a salary packaging arrangement^[2] as described in paragraph 37AC(b). As a result Division 9A of Part III (election for meal entertainment expenses) cannot apply.

27F. Paragraph 5B(1M)(a) applies as the benefit is provided under a salary packaging arrangement and is constituted by the provision of meal entertainment as defined in section 37AD.

27G. The grossed-up taxable value of the salary packaged meal entertainment benefits (as well as the grossed up-taxable value of any other fringe benefits provided to the employee in that year) are included in the 'individual grossed-up non-exempt amount' under step 1 of the method statement in subsection 5B(1E).

27H. Under subsection 5B(1E) the employee's individual grossed-up non-exempt amount is reduced by:

•

the general capping threshold^[3]; and

•

if any amount remains, by 'salary packaged entertainment cap'.^[4] This cap is the lesser of $5,000 and an employee's total grossed-up taxable value of the salary packaged meal entertainment benefits and salary packaged entertainment facility leasing expenses covered by subsection 5B(1M).

27I. This reduced amount for all employee's forms the employer's 'aggregate non-exempt amount' for the year of tax under subsection 5B(1E).^[5]

27J. The provision of salary packaged meal entertainment is not an excluded fringe benefit for the purposes of paragraph 5E(3)(a). The grossed-up value of such benefits is included in the reportable fringe benefits provisions in Part XIB.'

4. Paragraph 31

Omit '$17,000' in the second sentence, substitute '$17,000^[6]'.

5. Paragraph 32

Omit '$30,000' in the first sentence, substitute '$30,000^[7]'.

6. Paragraph 33

Before the paragraph; insert:

Salary packaged meal entertainment benefits provided on or before 31 March 2016

7. Paragraph 35

After the paragraph; insert:

Salary packaged meal entertainment benefits provided from 1 April 2016

35A. From 1 April 2016, the Tax and Superannuation Laws Amendment (2015 Measures No. 5) Act 2015 makes changes to the FBTAA to limit the concessional treatment of salary packaged entertainment benefits (for both meal entertainment and entertainment facility leasing expenses) by:

•

removing the subsection 5E(3) reporting exclusion in respect of salary packaged entertainment benefits so that these benefits now form part of the employee's individual fringe benefits amount under section 5E;

•

removing access to the Division 9A and section 152B elections; and

•

introducing a $5,000 cap on the grossed-up value of salary packaged entertainment benefits under subsections 5B(1E) and 5B(1M).

35B. For employers subject to the provisions of section 57A, the provision of salary packaged entertainment benefits are capped at $5,000 of the grossed-up taxable value of fringe benefits for each employee. Any salary packaged entertainment benefits that exceed this cap will be included in the general cap of either $17,667 or $31,177 for the FBT year commencing 1 April 2016. This is because of the interaction between section 57A and subsection 5B(1L). For benefits provided from 1 April 2016, step 1 of the method statement in subsection 5B(1L) no longer disregards the provision of salary packaged entertainment in calculating an employer's fringe benefits taxable amount.^[8]

35C. The benefit is a 'tax exempt body entertainment benefit' under section 38 which applies when a not-for-profit employer incurs non-deductible expenditure on entertainment of an employee or associate of an employee. Elections under Division 9A of Part III no longer apply where there is a salary packaging arrangement.^[9]

35D. In relation to salary packaged entertainment benefits provided from 1 April 2016, under part XIB, the employer will be required to include the grossed-up taxable value of salary packaged entertainment benefits on an employee's payment summary where the value of these benefits, and that of other benefits provided to the employee in the particular FBT year, exceeds $2,000.

8. Paragraph 36 (Detailed contents list)

Omit:

Insert:

9. References

Insert:

Related Rulings/Determinations:

TR 2001/2

10. Legislative references

Insert:

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FBTAA 1986 5B(1M)

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FBTAA 1986 5B(1M)(a)

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FBTAA 1986 5E

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FBTAA 1986 5E(3)

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FBTAA 1986 Pt III Div 9A

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FBTAA 1986 37AC

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FBTAA 1986 37AC(b)

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FBTAA 1986 38

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FBTAA 1986 39

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FBTAA 1986 57A(1)

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FBTAA 1986 57A(2)

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FBTAA 1986 57A(3)

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FBTAA 1986 57A(4)

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FBTAA 1986 57A(5)

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FBTAA 1986 136(1)

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FBTAA 1986 152B

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Tax and Superannuation Laws Amendment (2015 Measures No. 5) Act 2015

This Addendum applies on and from 1 April 2016.

Commissioner of Taxation
24 August 2016

© AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA

You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).

Not previously issued as a draft

References

ATO references:
NO 1-7VVP9JA

Business Line:  PGH