Issue
Do the contributions made by an employer to the employee's social club constitute a fringe benefit as defined under subsection 136(1) of the Fringe Benefit Tax Assessment Act 1986 (FBTAA)?
Decision
No, the contributions made by an employer to the employee's social club do not constitute a fringe benefit as defined under subsection 136(1) of the FBTAA.
Facts
The employer makes contributions to the employee's social club to the amount of 50% of the actual total amount contributed by employees themselves.
The social club is run by and consists solely of employees. All monies received by the employee's social club are used for the benefit of the employees.
Reasons for Decision
The definition of a fringe benefit contained within subsection 136(1) of the FBTAA provides that a benefit will be a fringe benefit when that benefit is provided to the employee or an associate of the employee by an employer or its associate in respect of the employment of the employee, unless the benefit is one of the benefits specifically exempted from being a fringe benefit.
The contribution made by the employer is a benefit provided by the employer to the social club. However the social club is not an employee of the employer nor is it considered to be an associate of the employees.
The social club is also not an associate or an arranger of the employer and therefore any consequential benefits enjoyed by the employee from the social club are not considered to be fringe benefits as defined.
The benefit provided by way of the contribution to the social club by the employer, in the absence of an arrangement to avoid or reduce fringe benefits tax under section 67 of the FBTAA, is not considered to be made in respect of employment of the employees.
Accordingly the benefit provided to the employee's social club is not considered to be a "fringe benefit" as defined under subsection 136(1) of the FBTAA.