CHECKLIST
Before it can be decided on whether provision of food and drink constitutes
entertainment the reasons for providing food and drink need to be analysed. Below
are the questions that should be asked:
(a)
Why is the food or drink being provided. This test is a ‘purpose test’. For
example, food or drink provided for the purposes of refreshment does not
generally have the character of entertainment, whereas food or drink
provided in a social situation where the purpose of the function is for
employees to enjoy themselves has the character of entertainment.
(b)
What food or drink is being provided. As noted above, morning and
afternoon teas and light meals are generally not considered to constitute
entertainment. However, as light meals become more elaborate, they take
on more of the characteristics of entertainment. The reason for this is that
the more elaborate a meal, the greater the likelihood that entertainment
arises from the consumption of the meal.
For example, when an employer provides morning or afternoon teas or
light meals, that food or drink does not usually confer entertainment on the
employee. By contrast, a three course meal provided to an employee
during a working lunch has the characteristics of entertainment. The
nature of the food itself confers entertainment on the employee.
(c)
When is the food or drink being provided. Food or drink provided during
work time, during overtime or while an employee is travelling is less likely
to have the character of entertainment. This is because in the majority of
these cases food provided is for a work-related purpose rather than an
entertainment purpose. This, however, depends upon whether the
entertainment of the recipient is the expected outcome of the provision of
the food or drink. For example, a staff social function held during work
time still has the character of entertainment.
(d)
Where is the food or drink being provided. Food or drink provided on the
employer’s business premises or at the usual place of work of the
employee is less likely to have the character of entertainment; refer to the
reasons in (b) and (c) above. However, food or drink provided in a
function room, hotel, restaurant, café, coffee shop or consumed with other
forms of entertainment is more likely to have the character of
entertainment. This is because the provision of the food or drink is less
likely to have a work-related purpose.
No one of the above factors will be determinative; however, paragraphs (a) and (b)
are considered the more important. The application of the above factors results in the
determination of whether the food or drink amounts to meal entertainment. Once this
determination is made, the employer must then decide whether each item of actual
expenditure on meal entertainment is to be treated individually under the ITAA and
FBTAA or whether to elect that one of the methods contained in Division 9A of the
FBTAA is to apply. If the election is made then the taxation outcome for the
individual meal is no longer relevant.
MEAL ENTERTAINMENT
Circumstances under which Food or Drink was
provided
Food or Drink consumed by employees on work
premises
I. At a social function
II. Morning, afternoon teas and light lunches
(without alcohol)
III. Christmas party
IV. Full meal e.g. 3 course meal
V. Light meal e.g. 1 course meal provided
when the purpose is not entertainment based
e.g. working lunch (without alcohol).
VI. Awards/Graduation
 finger food, no alcohol
 finger food, with alcohol
Consumed by associates # (e.g. family members)
on work premises
I. At a social function
II. Morning, afternoon teas and light lunches
III. Christmas party
IV. Full meal e.g. 3 course meal
V. Light meal e.g. 1 course meal
Consumed by clients/visitors (non employees or
non associates)
I. Must be a social function or meal
II.
Working lunch meeting on Flinders
premises
Consumed off the work premises at a social
function or business luncheon
I. By employees
II. By clients/visitors
III. By associates
Consumed by employees whilst travelling
I. Employee travels and dines alone
II. Employees travelling and dining together
III. Employee travelling with client and dining
together
IV. Employee dines with another employee,
who is not travelling
 Travelling employee
 Non-Travelling employee
Employees dining together and not travelling
I. Employee entertains himself and/or another
employee
FBT
Account
Applicable
Code
GST
Code
Yes
No
2050
2051
GST
GST
Yes
Yes
No
2050
2050
2051
GST
GST
GST
No
Yes
2051
2050
GST
GST
Yes
Yes
Yes
Yes
Yes
2050
2050
2050
2050
2050
GST
GST
GST
GST
GST
No
No
2057
2051
INPUT
GST
Yes
No
Yes
2050
2057
2050
GST
INPUT
GST
No
No
No
2051
2051
2051
GST
GST
GST
No
Yes
2051
2050
GST
GST
Yes
2050
GST
MEAL ENTERTAINMENT
Circumstances under which Food or Drink was
provided
Meal consumed whilst attending seminar
I. Incidental to an eligible seminar *
II. Light breakfast at a non-eligible seminar
III. Light refreshments, including moderate
amounts of alcohol provided at a noneligible seminar
IV. Clients/Visitors – for all of the above
Consumed by employees at promotions
I. Function not held on employer’s premises
and is open to the general public
Accompanying Spouses
I. With employee travelling on business and
employer pays for all meals
 Employee
 Spouse
FBT
Account
Applicable
Code
GST
Code
No
No
No
2051
2051
2051
GST
GST
GST
No
2051
GST
Yes
2050
No
Yes
2051
2050
# Associates An associate includes employee spouses, children or family members.
An associate of the University includes any companies wholly owned by Flinders
University such as Flinders Consulting or any third parties which Flinders enters into
a joint venture agreement.
Employees: Past, present and future employees are also “employees” for FBT
purposes. A ‘reasonable’ effort must be made to determine who past or future
employees of Flinders are.
* To qualify as an “eligible seminar”, the seminar must:





Be a conference, convention, lecture, training session, or speech;
It must have a continuous duration of 4 hours (excluding breaks);
Business discussions in the normal course of business are not eligible, unless it
is an exempt training seminar (see below);
The sole or dominant purpose of the seminar must not be the promotion or
advertising of the business; and
The sole or dominant purpose must not be the provision of entertainment.
“Exempt training seminars” qualify as eligible training seminars where:



The seminar is organized to discuss general policy issues; and/or
To enable employees to discuss general policy issues relevant to the internal
management of Flinders’ business; and
The seminar is not held on premises of the University. It must be held on
premises of a person whose business includes the organising of seminars or
making premises available for those purposes.