Financial companies face FBT challenge

Australian Banking & Finance, April 30, 2004

NEXT TIME YOU GATHER THE troops for a team-building exercise, think again.

Financial institutions who hold conferences and team-building activities for staff may be unwittingly contributing to fringe benefits tax liabilities, according to Deloitte.

Deloitte says that many employers are unaware that recreational activities, such as white water rafting, high ropes climbing, sailing and golf days, which are provided for team building purposes, will be categorised as entertainment and therefore be subject to FBT.

Deloitte Tax Services partner Jim Morrison says that although the intention of the activity is to encourage team building and staff development, the nature of the activity may be viewed as entertainment.

"A parallel can be drawn between this and employees attending business lunches," he said.

"Although the lunches may have a business purpose, the Australian Taxation Office classifies them as entertainment, with the employees' portion being subject to FBT."