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NFP Pilot AlertOne of the proposed changes in the 2015-2016 Federal Budget was that meal entertainment benefits will no longer be wholly exempt from Fringe Benefits Tax (“FBT”) for Not-For-Profits.

Treasurer, Mr Hockey has proposed to introduce a grossed-up cap of $5,000 per employee for all meal entertainment benefits, above which the employer will be required to pay FBT. The measure is to apply from 1 April 2016.

How will this affect Not-for-Profits?

 

Allocation

The introduction of the cap will mean that employers will be required to record and allocate all meal entertainment benefits to specific employees. As such, systems will need to be implemented to ensure costs are captured and allocated to individuals receiving the benefits.

In order to minimise FBT exposure, employers will need to track benefits. This will ensure taxable values remain under the proposed threshold. For example, in the 2016-2017 FBT year all meal entertainment provided to an employee that exceeds $2,329 will be subject to FBT.

Reporting

The proposed legislation will also mean that meal entertainment benefits, which have previously been exempt, will be included in reportable fringe benefits for employees.

Existing Caps

The good news is that the proposed meal entertainment cap will remain separate from the existing FBT exemption caps, being either $17,667 or $31,177 grossed-up depending on the not-for-profit entity type.

Next Steps

If you would like to find out more about how the proposed changes may impact your business or yourself, or would like to discuss these matters further, please contact Murray Howlett or Daniel Gill on (07) 3023 1300.