While many employers had revised their approach to calculating the taxable value of meal entertainment fringe benefits from the 50/50 split method to the actual method during the COVID-impacted FBT years due to a significant drop in the volume of meal entertainment transactions and the relevance of the minor benefits exemption, in the post-COVID era, this trend has been reversed for many employers. More recently, in the face of employee hesitation to return to the office, one practice adopted by some employers to incentivise employees to return has been to increase the provision of meal entertainment benefits for those employees (such as staff lunches, functions and office drinks, etc.). In this context, it is recommended that employers comprehensively review their meal entertainment fringe benefits for the 2024 FBT year to ensure that these types of benefits are appropriately identified, calculated and disclosed.
For many employers, the increase in the volume of meal entertainment benefits provided presents significant challenges in both analysing the relevant data and identifying the individual recipients of all meal entertainment benefits during the FBT year. Where employers are not in a position to undertake this analysis in an efficient manner (or the requisite level of supporting records have not been maintained throughout the year), this may result in employers finding themselves in a position where their only feasible option is to use the 50/50 method to value meal entertainment, which for many employers could result in higher than necessary FBT costs compared to the actual method.
With improvements in technology, it is recommended that employers consider whether there is an opportunity to incorporate technology into their internal processes to support the review and characterisation of meal entertainment expenditure to better manage their FBT liabilities on the provision of these benefits. For more information on how PwC is able to support employers in this area, please refer to our Workforce Automate website.
If you have any questions about your FBT obligations, please reach out to your PwC specialist.