6 August 2008:  Employers that are entertaining staff and clients at events to celebrate the Beijing Olympics should ensure that they also consider the fringe benefits tax (FBT) implications, according to professional services firm, Deloitte.

Elizma Bolt, employment tax partner at Deloitte, said this applies both to employers with staff members attending the games in China, as well as those hosting events in Australia.

“Employers need to understand what to review to ensure that they capture all relevant costs and don’t overpay FBT,” Ms Bolt said.

The methodology used by an employer to value meal entertainment throughout the year could also potentially impact FBT costs associated with Olympic related entertainment, she said.

“For example, if an employer uses the actual valuation method and hosts a one-off Olympic related event, such as a lunch for clients and staff with a former Australian Olympian, and the cost is less than $300 per person, the benefit could potentially be provided without incurring any further FBT costs,” said Ms Bolt.

She also noted that employers should consider the structure and way entertainment is made available to their staff and clients.

“Where employees are on a packaged tour to China, the employer should consider whether they are able to split the costs between recreational and meal entertainment,” Ms Bolt said.

“The impact on employees could be significant as meal entertainment such as food and drink does not have to be disclosed on employees’ payment summaries. However, recreational entertainment, such as tickets to a specific event, needs to be shown on the payment summary.

“The disclosure of these fringe benefits on employees’ payment summaries could impact an employee’s entitlement to government support and their liability to certain surcharges and levies,” Ms Bolt said.

Elizma Bolt
Deloitte
Employment Taxes Partner
Tel: +61 (0) 2 9322 7614
Mobile: 0411 144 405