New FBT Concessional Caps – Meal Entertainment and Entertainment Facility Leasing Expense (EFLE) Benefits
The Government has announced that it will introduce a $5,000 grossed-up cap on exemption and rebate concessions relating to the provision of certain meal entertainment and EFLE benefits. These changes will apply to meal entertainment and EFLE benefits that are provided as part of a 'salary packaging arrangement', being arrangements involving a benefit provided in exchange for a reduction in salary or wages, or where the benefit is part of the employee's remuneration package.
This change will impact employers including public benevolent institutions, public and not for profit hospitals, public ambulance services, charitable institutions and a range of not for profit institutions, clubs and associations.
Such benefits will also become Reportable Fringe Benefits for Payment Summary Reporting purposes.
Meal entertainment and EFLE were originally 'excluded' from FBT when the capping measures were introduced as an administrative concession, on the basis that it would be too difficult to track and record the benefits against an individual’s general $17,000 or $30,000 grossed-up caps. The government views the salary packaging of these items to be an unintended outcome of the availability of these concessions and, through the introduction of the $5,000 grossed-up cap, seeks to limit the tax leakage. Where the $5,000 grossed-up is exceeded, the excess benefits will count towards the existing general caps.
These changes will take effect from the FBT year commencing 1 April 2016. The announcement is silent on whether existing salary sacrifice arrangements, or those entered into prior to 1 April 2016, will be grandfathered for concessional treatment post-1 April 2016, in a similar manner to previous FBT amendments impacting salary sacrifice arrangements.