Understanding FBT Rates

When it comes to taking clients out for a quick lunch to discuss key details, it is important to understand the fundamentals of a process such as this. It plays a big role in what you end up getting in terms of overall value from the relationship.

There are specific details that need to be accounted for when you are dealing with any type of client including the underlying cost.

The same applies to taking out employees that have been doing well and deserve a reward on your behalf.

Can Meals Be Deducted From Taxes?

This is the first question that is going to arise. Is it possible to look for a tax deduction in a situation such as this?

In general, there is not going to be a set deduction in place for something like this. The only way for it to happen is if there is a fringe benefits tax (FBT) paid. The same applies to the GST that will be added on top of the meal cost.

With meal entertainment, the idaea is to look for the following requirements:

* Entertainment In The Form Of Food And Drink
* Travel-Related Expenses To Move Forward With The Meal Entertainment
* Costs Associated With Travel Expenses For Employees
* Taking Employees Out For Lunch Or A Coffee
* Setting Up A Meeting In A Restaurant Or Cafe For A Drink Or Food
* Social Parties (Christmas Parties) With Meals

Consequences

There are specific consequences in place when it comes to the FBT with meal entertainment expenses.

This can include:

* Gross-Up Rate
* Taxable Rate
* FBT Rate

When there is a noted cost such as this applied for the meal entertainment benefit, it is important to look at the underlying deductible that comes along with something like this during the process.

It is important to dig through the various requirements when it comes to figuring out whether or not the meal entertainment is tax-deductible in the first place. This is key for those who want to figure out what is right and what is wrong.

Exemptions

Two exemptions are legally listed for FBT requirements and tax deductions.

These are minor and infrequent meal entertainment expenses that will pop up.

Those exemptions can make it possible for you to bring down the taxable value of the benefits down to zero.

Questions?

In conclusion, the provision of meal entertainment benefits can be a taxation minefield. We strongly suggest that if you have questions regarding your business practices and how you reward your employees please contact us on (03) 9583 0550 or send us an email.

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