With the holiday season coming up, employers may be planning to celebrate with their employees.
Before they hire a restaurant or book an event, employers should make sure to work out if the benefits they provide their employees are considered entertainment-related, and therefore subject to fringe benefits tax (‘FBT’). This will depend on:
- the amount they spend on each employee;
- when and where the celebration is held;
- who attends — is it just employees, or are partners, clients or suppliers also invited?
- the value and type of gifts they provide.
Employers who do provide entertainment-related fringe benefits should keep records detailing all of this information so they can calculate their taxable value.
