Crack down on entertainment salary packaging following changes to FBT

Many Not for Profit organisations have long valued salary packaging as a tool to competitively attract and retain talent across the sector.

This muscle has been slightly weakened following measures announced in the Federal Budget that will see a crackdown on the treatment of Fringe Benefit Tax. 
 
The Government is proposing to introduce a new grossed-up cap of $5,000 per year per employee for salary sacrificed meal entertainment and entertainment facility leasing expenses (collectively referred to as ‘entertainment benefits’) which will have a huge impact on the Not for Profit sector.
 
“The main problem with this change is that the effective value of other Not for Profit salary packaging opportunities has been diminishing over time and entertainment packaging was a way of combatting this. It might now be harder for Not for Profit's to attract and retain high caliber employees,” Elizabeth Lucas, Fringe Benefits Tax Specialist at Grant Thornton Australia.
 
According to leading accounting and advisory firm Grant Thornton Australia, this type of change was expected by the sector, but exceeds what most would view as fair.  Some organisations have imposed their own internal caps, but most are more like $5,000 in expenses (not grossed up).
 
“Any entertainment benefits exceeding the new cap would then be counted towards the existing general cap. All entertainment benefits are also proposed to be included as reportable fringe benefits.  One hopes this is a reference to salary packaged benefits only and not, for instance, the staff Christmas party,” said Ms Lucas.
 
The measure is intended to be effective from 1 April 2016, potentially generating enormous activity as individuals re-visit their salary packaging in the meantime.

Helina Lilley, National Public Relations Manager, T  +61 2 8297 2421, M  +61 437 725 520, E helina.lilley@au.gt.com