Taxation Laws Amendment (FBT Cost of Compliance) Act 1995 (145 of 1995)

Schedule 1   MEAL ENTERTAINMENT AND ENTERTAINMENT FACILITIES

Part 1   AMENDMENT OF THE FRINGE BENEFITS TAX ASSESSMENT ACT 1986

1   After Division 9 of Part III

Insert:

"Division 9A-Meal entertainment

"Subdivision A-Meal entertainment

Key principle

"37A.

An employer may elect that this Division will apply to the employer for

an FBT year. If the employer does this, the taxable value of meal

entertainment fringe benefits provided to the employer's employees and

associates of those employees by the employer will either be half the

expenses incurred for the FBT year by the employer in providing meal

entertainment benefits or, if the employer makes a further election, an

amount worked out based on a 12 week register kept by the employer.

Division only applies if election made

"37AA. An employer may elect that this Division applies to the

employer for an FBT year.

Employee contributions to be excluded

"37AB. For the purposes of this Division any reference to expenses or

expenditure in relation to meal entertainment or meal entertainment

benefits excludes any contribution from an employee or an associate of

an employee that is not subject to reimbursement by the employer.

Meal entertainment benefits

"37AC. Where at a particular time an employer (the provider) to whom

this Division applies provides meal entertainment to another person

(the recipient) the provision of the meal entertainment is taken to

constitute a meal entertainment benefit provided by the provider to the

recipient at that time.

Meaning of provision of meal entertainment

"37AD. A reference to the provision of meal entertainment is a

reference to the provision of:

(a) entertainment by way of food or drink; or

(b) accommodation or travel in connection with, or for the purpose of

facilitating, entertainment to which paragraph (a) applies; or

(c) the payment or reimbursement of expenses incurred in providing

something covered by paragraph (a) or (b);

whether or not:

(d) business discussions or business transactions occur; or

(e) in connection with the working of overtime or otherwise in

connection with the performance of the duties of any office or

employment; or

(f) for the purposes of promotion or advertising; or

(g) at or in connection with a seminar.

Fringe benefits only arise if employer is provider

"37AE. No meal entertainment fringe benefit arises where the employer

in relation to whom the benefit would otherwise arise is not the

provider of the benefit.

No other fringe benefits arise if election made

"37AF. If a meal entertainment fringe benefit arises in respect of

the provision of meal entertainment, no other fringe benefit arises in

relation to any person in respect of the provision of the meal

entertainment.

Some benefits still arise

"37AG. To avoid doubt, sections 37AE and 37AF do not prevent a fringe

benefit in relation to an employer arising under any provision of this

Act where the employer is not the provider of the benefit.

"Subdivision B-50/50 split method of valuing meal entertainment

Key principle

"37B.

If an employer elects that this Division applies, then (unless the

employer elects that Subdivision C applies) the taxable value of meal

entertainment fringe benefits provided to the employer's employees and

associates of those employees by the employer is half the expenses

incurred for the FBT year by the employer in providing meal

entertainment benefits.

Taxable value using 50/50 split method

"37BA. If this Division applies to an employer for an FBT year then,

unless the employer elects that Subdivision C applies, the total

taxable value of meal entertainment fringe benefits of the employer for

the FBT is 50% of the expenses incurred by the employer in providing

meal entertainment for the FBT year.

Note: This means that the employer's aggregate fringe benefits amount

(see subsection 136(1)) for the FBT year will include 50% of the total

expenses incurred by the employer for the provision of meal

entertainment to all persons in the FBT year.

"Subdivision C-12 week register method

Key principle

"37C.

If an employer elects that this Subdivision applies, the taxable value

of meal entertainment fringe benefits is to be calculated by reference

to a 12 week register kept by the employer.

Election by employer

"37CA. An employer who elects that this Division applies may elect

also that this Subdivision applies to meal entertainment provided by

the employer for an FBT year if the employer has a valid meal

entertainment register for that year.

Taxable value using 12 week register method

"37CB.(1) If the employer elects that this Subdivision applies for an

FBT year then, despite any other provision of this Act, the taxable

value of meal entertainment fringe benefits for the employer for the

FBT year is worked out using the formula:

Total meal entertainment expenditure X Register percentage

Note: This means that the employer's aggregate fringe benefits amount

(see subsection 136(1)) for the FBT year will include a proportion of

the expenses incurred by the employer for the provision of meal

entertainment for all persons in the FBT year. The proportion is

worked out on the basis of the 12 week register.

"(2) The register percentage is the percentage worked out using the

formula:

[(Total value of meal entertainment fringe benefits)/(Total value of meal entertainment)] * 100%

where:

total value of meal entertainment fringe benefits means the total value

of meal entertainment fringe benefits that are provided by the employer

in the 12 week period covered by the employer's register.

total value of meal entertainment means the total value of meal

entertainment provided by the employer during the 12 week period

covered by the register.

"(3) The total meal entertainment expenditure is the total of

expenses incurred by the employer in providing meal entertainment for

the FBT year.

Choosing the 12 week period for a register

"37CC.(1) The register must be kept for a continuous period of at

least 12 weeks throughout which meal entertainment is provided by the

employer.

"(2) The period for which the register is kept must be representative

of the first FBT year for which it is valid.

"(3) If the register does not meet these conditions it is not valid.

FBT years for which register is valid

12 week period in one FBT year

"37CD.(1) If the 12 week period begins and ends in the same FBT year,

the register is valid for that FBT year and, subject to subsection (3),

for each of the 4 FBT years immediately following that year.

12 week period over 2 FBT years

"(2) If the 12 week period begins in one FBT year and ends in another

FBT year, the register is only valid for the second FBT year and,

subject to subsection (3), for each of the 4 FBT years immediately

following that year.

When register ceases to be valid

"(3) A register that is valid for an FBT year ceases to be valid at

the end of that FBT year if the total of expenses incurred by the

employer in providing meal entertainment for that FBT year is more than

20% higher than the corresponding total for the first FBT year for

which the register was valid. A register also ceases to be valid for

an FBT year if there is a later valid register for that FBT year.

Matters to be included in register

"37CE.(1) The register must include the details of the following:

(a) the date the employer provided meal entertainment;

(b) for each recipient of meal entertainment-whether the recipient is

an employee of the employer or an associate of the employer;

(c) the cost of the meal entertainment;

(d) the kind of meal entertainment provided;

(e) where the meal entertainment is provided;

(f) if the meal entertainment is provided on the employer's premises-

whether it is provided in an in-house dining facility within the

meaning of subsection 51AE(1) of the Income Tax Assessment Act 1936.

"(2) A person responsible for making entries in the register must

make the entry as soon as practicable after he or she knows the details

required by subsection (1).

Fraudulent entries invalidate register

"37CF. For the purposes of this Act, a register is not valid if the

register contains an entry that is false or misleading in a material

particular.".