Looking at entertainment expenditure from a GST perspective, the question is the extent to which an entity is entitled to claim a GST credit.
As fringe benefits apply to employees (and associates of employees), to the extent the expense relates to providing entertainment to an employee and the amount is also a fringe benefit, the amount will be deductible for income tax.
With regard to the 50/50 or 12-week register methods for meal entertainment expenditure, an entity can make an FBT election to apply one of these methods.
Income tax laws have been around for a long time, with the current income tax legislation essentially drawn from statutes first introduced in 19 (respectively the ).
When reviewing entertainment expenditure an entity would typically consider the extent to which: In this regard, the provisions of the income tax, FBT and GST laws appear to interact consistently.
It is further noted that where a benefit provided to an employee is an exempt benefit it is not a fringe benefit. Such exempt benefits are therefore not fringe benefits and would not fall within the exception referred to above.
Benefits provided to employees of certain charitable organisations, such as public benevolent institutions, public hospitals, public ambulance entities, etc. Therefore where an exempt entity incurs entertainment expenditures which are exempt under s.
Where this is the case, the amount of meal entertainment expenditure that is subject to FBT is based on the method chosen.
If the 50/50 method is chosen, then 50% of the meal entertainment expenditure is subject to FBT and accordingly this 50% will be income tax deductible.
Subject to the additional comments below for certain charitable and government organisations, where entertainment expenditure is incurred by an exempt entity, these amounts would be non-deductible expenses because the entity is an exempt entity, and not specifically because of the operation of Division 32 of or due to the relevant 50/50 or 12-week register elections.
Subsection 69-5(4) provides that: ‘If the entity making the acquisition or importation is an exempt entity, the acquisition or importation is a non-deductible expense if it would have been a non-deductible expense under subsection (3) or (3A) had the entity not been an exempt entity.’ Therefore, to determine the extent to which an exempt entity is able to claim a GST credit, s.
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