ATO Interpretative Decision
ATO ID 2009/141
Fringe Benefits Tax
Entertainment facility leasing expenses: hire of a marqueeFOI status: may be released
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This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Where an employee hires a marquee for use at the employee's home for the purpose of the provision of entertainment, is the marquee a 'facility' as that term is used in the definition of 'entertainment facility leasing expenses' under subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)?
Decision
Yes. The marquee is a 'facility' as that term is used in the definition of 'entertainment facility leasing expenses' under subsection 136(1) of the FBTAA.
Facts
The employer of the employee is a public hospital.
The employee has incurred expenses on hiring a marquee to be constructed at the employee's home for a family wedding celebration.
The expenses are incurred 'for the purpose of the provision of entertainment' as those words are used in the definition of 'entertainment facility leasing expenses' under subsection 136(1) of the FBTAA.
The employer reimburses the employee for the expenses incurred in hiring the marquee, which includes the costs of set-up and removal.
No part of the expenses incurred is for the provision of food, drink or advertising.
Reasons for Decision
For employers that are public hospitals subject to the provisions of section 57A of the FBTAA, benefits provided to employees whose taxable values are wholly or partly attributable to entertainment facility leasing expenses are not subject to fringe benefits tax. Refer also to ATO Interpretative Decision ATO ID 2009/45.
Under the definition of 'entertainment facility leasing expenses' in subsection 136(1) of the FBTAA, expenses incurred by a person must be the hire or lease of a corporate box, boat, plane or other premises or facilities for the purpose of the provision of entertainment.
A marquee is a temporary structure which can be used to accommodate people for dining and other purposes. In the current example a marquee is used to hold a wedding reception at the employee's home. Other examples might include a marquee used for entertaining corporate guests at a sports event; for the display of goods at a trade show; to house guests and staff at a fashion show.
Whilst the term 'facility' is not defined in the FBTAA it is used in conjunction with other definitions such as:
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- 'child care facility' in subsection 136(1) of the FBTAA means 'a facility....for the purpose of minding, caring for or educating....'
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- 'in-house health care facility' in subsection 136(1) of the FBTAA means '....a clinic, surgery, first-aid station or similar facility...on premises of the employer....'
Similarly, the term 'facility' is used in the Income Tax Assessment Act 1997 (ITAA 1997) including instances where a facility is used for recreation purposes.
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- A 'facility' used for recreation on the employer's property and operated for employees is described in section 32-30 Item 1.5 of the ITAA 1997. A facility used for recreation in section 32-30 would include a drink vending machine or a pool table in a staff dining room. By exclusion, section 32-30 also is indicative that a facility can be for accommodation.
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- A 'leisure facility' as defined in subsection 26-50(2) of the ITAA 1997 is 'land, a building, or part of a building or other structure, that is used (or held for use) for holidays or recreation. Examples of buildings or other structures which fall within the definition of 'leisure facility' would be ski-lodges, fishing shacks, holiday cottages, swimming pools and amenity buildings used in connection with tennis, bowling, golfing or swimming.
The word 'facility' is defined in the Macquarie Dictionary (Multimedia version 5.0.0) to mean:
facility
noun (plural facilities)
1. something that makes possible the easier performance of any action; advantage: transport facilities; to afford someone every facility for doing something.
9. a building or complex of buildings, designed for a specific purpose, as for the holding of sporting contests.
The word 'facility' is also defined in the Butterworths Encyclopaedic Australian Legal Dictionary, (Online Edition), LexisNexis Australia:
Facility
A building or appliance, designed for a specific purpose, which has the effect of making possible the easier performance of an action
The word facility, as described in each dictionary definition above, and as used in the income tax and fringe benefits tax definitions above is of wide meaning. It is accepted that the term 'facility' as it is used in the definition of 'entertainment facility leasing expenses' also has a wide meaning that includes buildings, part of buildings or other structures that is used for the purpose of the provision of entertainment.
In the present case the marquee is a temporary structure that has been hired and used for a wedding reception. The marquee is used for the purpose of the provision of entertainment.
The marquee is a 'facility' as that term is used in the definition of 'entertainment facility leasing expenses' under subsection 136(1) of the FBTAA
Date of decision: 9 October 2009Year of income: Year ended 31 March 2010
Legislative References:
Fringe Benefits Tax Assessment Act 1986
section 57A
subsection 136(1)
subsection 26-50(2)
section 32-30 Related ATO Interpretative Decisions
ATO ID 2009/45
Other References:
Macquarie Dictionary (Multimedia version 5.0.0)
Encyclopaedic Australian Legal Dictionary (Online Edition), LexisNexis
Keywords
Entertainment expenses
Entertainment facility leasing expenses
Excluded fringe benefits
Exempt benefits
Expense payment fringe benefits
FBT entertainment
FBT expense payment
Fringe benefits
Fringe benefits tax
ISSN: 1445-2782
| Date: | Version: | |
| You are here | 9 October 2009 | Original statement |
| 20 April 2017 | Updated statement |