Meal entertainment

Meal entertainment allows staff to pay less tax by claiming meals and drinks consumed in a restaurant/café or provided at a social gathering. Technically, it is defined as the "provision of entertainment by way of food or drink”. The meals and drinks (including those of guests with the eligible employee) do not have to be related to employment with NSW Health.

Accommodation or travel 'in connection with, or for the purpose of facilitating', meal entertainment e.g. taxi fares or an overnight stay are also an allowable part of this benefit and there is no limit to the number claims you can make.

Meal entertainment can be accessed in two ways:

  1. receipts – keep receipts for meals and drinks consumed in a restaurant or cafe (personal) or provided at a social gathering (personally or professionally catered) and complete the Meal Entertainment Claim Form
  2. card - apply for and use the Meal Entertainment Card to pay for meals and drinks consumed in a restaurant or cafe.

A combination of the two methods can be used, however, double claims (i.e. use their meal entertainment card and then apply for reimbursement) cannot be made.

Forms

Benefit cap

The maximum amount that can be claimed under meal entertainment is $2,649. This is a combined limit of both meal entertainment (receipts) and the Meal Entertainment Card.

Meal Entertainment is a reportable fringe benefit with a $5,000 ‘grossed up’ cap, and will be included on your Payment Summary. This cap is separate to the $17,000 ‘grossed up’ Salary Packaging cap (See Salary Packaging Information).

Conditions

General

The following conditions apply to all meal entertainment activities:

  • meals and drinks consumed must total more than $15
  • drinks (both alcohol and non-alcohol) can only be claimed if consumed in conjunction with a meal
  • take-away food and drink is not allowed. i.e. any receipt marked ‘takeaway’, ‘drive through’, ‘carry out’, will not be accepted
  • accommodation costs are restricted to one overnight stay. Holidays or any other recreational activities do not meet the criteria of “in connection with” and are not allowed.

Receipts

In addition to the general conditions, the following must be met to claim your personal, personally/professionally catered meal entertainment:

  • tax invoices/receipts must identify the restaurant/café/function centre/caterer. Credit card stubs alone are not acceptable
  • tax invoices/receipts must be itemised and include at least two meals
  • NSW Health needs to be satisfied that the employee paid the account. A simple receipt without any details of transactions is not proof of meal entertainment
  • claims should only be made when at least $500 worth of receipts are gathered.

Self-catering

In addition to the general conditions, the following apply to self-catered events:

  • a maximum of 12 functions per FBT year (April 1 – March 31) can be claimed
  • tax invoices/receipts for food and/or drink cannot include any other grocery items e.g. cups, napkins and plates, otherwise the full receipt will be disregarded
  • functions must be held within 14 days of food and drinks purchase
  • at least one guest must not reside at the address where the function is being held i.e. it’s not applicable if only household members are attending
  • claims total at least $500. However, multiple functions can be combined e.g. first dinner function is $200 and second is $300.

Meal Entertainment Card

In addition to the general conditions, the following apply to Meal Entertainment Cards:

  • NSW Health is required to conduct random audits of statements to ensure compliance with meal entertainment policy. You may be asked to provide your statement with appropriate explanation of any items that aren’t immediately identifiable as meal entertainment e.g. a department store appearing on your statement
  • any inappropriate use of the card will require a refund to NSW Health in post-tax dollars for the value of unauthorised use
  • where NSW Health is of the view that an employee continually breaches the policy, the employee’s card may be cancelled without further notice and disqualify the employee from applying for another Meal Entertainment Card for a period of time determined at the discretion of NSW Health
  • foreign currency fees may be incurred if the card is used overseas

Retrospective claims

Meal entertainment claims can be made with original tax invoices dated on or after 1 July 2002 or from an employee’s commencement date, whichever is later. For example, an employee who commenced on 1 July 2015 may claim from this date. An employee who commenced 1 January 2000 may claim from 1 July 2002.

Fees

An annual $22 administration fee is charged from your gross salary (before tax is deducted) when you set up meal entertainment.

Eligibility

Permanent full time, permanent part time and temporary employees with contracts of at least three months duration are eligible for salary packaging and meal entertainment.

Sharing the benefits

NSW Health offers meal entertainment to eligible staff on the condition that the benefit, through saved income tax, is shared equally. The amount saved is determined at the commencement of the package and will depend on how many fortnights it has been structured over.

The employer’s share of saving is calculated such that the difference between the after-tax position of the employee before and after packaging is shared equally between the employer and employee (after deducting administration fees).

Broadly speaking, the employer’s share of saving is calculated as follows:

50% x (disposable income with packaging less employee’s disposable income without packaging).

Purpose

The purpose of this statement is to provide guidelines on the authorised use of the Meal Entertainment Card (MEC) and to communicate to employees the audit procedure and sanctions that will apply if the MEC is used by an employee to pay for unauthorised expenses.

Employees should note that on application for an MEC they are declaring that the MEC will only be used for meal entertainment expenses. Strict adherence to this policy and procedure statement is a condition of use of the MEC and is required to ensure that the MEC complies with Australian Taxation Office rules.

Policy

The MEC is provided to employees as part of the salary packaging arrangements at NSW Health. The MEC can only be used to pay for qualifying meal entertainment expenses as explained in the following.

1. What expenses can an employee pay with the MEC?

Meal entertainment expenses are expenses representing provision of:

(a) entertainment by way of food and drink or
(b) accommodation or travel in connection with, or for the purpose of facilitating entertainment by way of food and drink.

While this definition taken from the legislation is a little vague, what is clear is that the provision of food or drink in all circumstances is not meal entertainment. In order for food or drink to qualify as meal entertainment, there must be some element of entertainment present.

Entertainment in this sense does not refer to a performance or the like, but more generally to some gathering of people to carry out some activity with a view to enjoying themselves.

In cases of doubt an employee needs to consider:

(a) Why is the food or drink being provided? For example, food or drink provided for the purpose of refreshment would not generally be meal entertainment, whereas food or drink provided at a social function for enjoyment would be meal entertainment.

(b) What food or drink is being provided? Light meals such as morning tea are less likely to be meal entertainment as opposed to more elaborate meals.

(c) When is the food or drink provided? Food or drink during working hours is less likely to be meal entertainment than food or drink provided after hours.

(d) Where is the food or drink being provided? Food provided in a social setting, e.g. hotel, restaurant, café, coffee shop, etc. is more likely to be meal entertainment.

2. Examples of expenses that are likely to be meal entertainment

  • Breakfast/lunch/dinner with friends or family at a restaurant/café (with knife & fork).
  • Purchases of food or drink for a party, BBQ, etc (special event declaration required).
  • Drinks/food while on holidays at a resort/hotel, etc.
  • Taxi travel to a club/restaurant etc. for the purposes of consuming food/drink at that venue.

3. Examples of expenses that are not likely to be meal entertainment

  • Purchase of general household food and drink.
  • Purchase of alcohol to be consumed generally at home.
  • Tickets to movies, sporting or cultural events.
  • Travel/accommodation costs for local or overseas holidays for recreation purposes.

4. What an employee should do if they are not sure if an expense is meal entertainment

If an employee is not sure that an expense is a meal entertainment expense, the employee should not pay for it with the Meal Entertainment Card. An employee can of course pay for such expenses with their credit card, if they have salary packaged a credit card utilising the $17,000 FBT free cap.

5. What an Employee can’t pay for with the MEC

Employees should also note that the following transactions are not permitted with the MEC:

  • periodical payments or direct debits cannot be set up on the card
  • the card cannot be used to withdraw cash; e.g. from ATMs, or when making EFTPOS transactions.

Audit procedure for MEC’s

The following outlines the audit procedure for MECs:

NSW Health randomly selects 20 employees each quarter and will request each employee selected to submit to NSW Health for audit, their last month’s card statement provided by Westpac.

  1. Employees will need to provide hand written annotations on any items appearing on the statement that are not obviously meal entertainment from the entry appearing on the statement (eg items purchased from a hardware store, supermarket).
  2. The annotation needs to clearly explain the entertainment connection of the food or drink purchased (e.g. for birthday party on such and such date).
  3. Items that are not food or drink do not qualify in any circumstances unless the items are travel or accommodation for the purpose of facilitating entertainment by way of food or drink. In these circumstances the annotation needs to identify the particular meal entertainment event connected with the travel and/or accommodation expenses charged to the MEC. (e.g. taxi travel for meal at such and such restaurant on such and such date).
  4. NSW Health may request further information from the employee where the information provided together with the statement is not adequate.
  5. Employees need to write at the end of the statement the following: “I declare that the hand written annotations on this statement are true and correct”. Employees should then sign their name and enter the date signed.
  6. Where an employee breaches these rules but the MEC is not cancelled, their last months statement is to be reviewed in future audits. Such a review will be over and above the 20 referred to in Item 1 above (The Director of Internal Audit is to assess the timing and duration of ongoing reviews).

Meal entertainment quick reference list

Expenses Allowed

  • Dinner/lunch/breakfast at a restaurant/café for employee and family/friends.
  • Coffee and cake with friends at a café.
  • Professional catering costs for a private function, e.g. wedding or birthday party.
  • Purchases of food and drink (including alcohol) for a party held at home. (Special declaration required).
  • Taxi travel to restaurant/venue for meal entertainment. The meal cost must be included in the claim.
  • Travel and accommodation costs where the purpose of the travel was for meal entertainment. e.g. travel to city and overnight stay for a celebratory dinner. The meal cost must be included in the claim.
  • Overseas meal purchase if receipt is in English.

Expenses Not Allowed

  • Any meal for one person only.
  • Drive thru or take away at fast food restaurant.
  • Take away from restaurant or café.
  • Purchases of food and drink for general consumption at home e.g. grocery items.
  • Travel and accommodation costs where the purpose of the travel was for more than meal entertainment. e.g. travel to city and overnight stay to see a show and have a special dinner.
  • Travel and accommodation cost for a holiday e.g. trip to Gold Coast.
  • Holiday or cruise where fare includes all meals.
  • Car hire even if related to meal purchase.
  • Travel and accommodation to attend a wedding dinner as a guest.
  • Admission cost to theatres, movies, sporting or cultural events.
  • A package where food or drink is included but is not the primary purpose, e.g. Harbour cruise with morning tea provided.
  • Drink only including purchases for consumption at BYO restaurant.
  • Tax invoice/receipt less than $15.00.
  • Credit card stub receipt only or receipt that is not itemised/does not show business name and ABN.
  • Non-food related purchases for self-catering.

Further information

For further information and assistance contact the Employee Benefits Team on:

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