FBT ACCESS TO RECREATION CENTRES - EXEMPT BENEFIT
18 April 2008
The ATO has recently released a decision to the effect that a where a local government council provides an employee with the use of the local recreation centre including use of a swimming pool and gymnasium, an exempt benefit results.
The Council carries on a business of providing the use of the recreation centre to members of the public for payment. The business is one of providing recreation which is entertainment and the activity is considered to be 'in the ordinary course of a business'. The employer's expenditure is not entertainment expenditure; is not 'non-deductible entertainment expenditure' and is not 'non-deductible exempt entertainment expenditure'.
The benefit provided to the employee, being the use of the recreation centre over the course of the year is therefore not a benefit which is covered by section 38 of the FBTAA.
The benefit provided to the employee is a 'residual benefit' under section 45 of the FBTAA.
Note: as the benefit provided to the employee is a residual benefit, and if the recreation centre is located on the employer's business premises, the employer will be able to access the tax exemption available for the employee's use of a recreation facility under subsection 47(2) of the FBTAA.