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Entertainment tax break
Amway Australia has been allowed to claim a tax break for the cost of travel, hotels, food and drink for its week-long distributor seminars - even though they are held in exotic holiday locations.
The case sets a precedent for other events where entertainment expenses may be fully deductible with no FBT.
The seminar in question was held at the Bangkok Shangri La at a cost of over $2500 per head. The court ruled it was tax deductible because it was a "serious business occasion... notwithstanding that it was held in an exotic location in a quality hotel and provided an opportunity for combining business with pleasure".
The case was the first on the byzantine tax rules on business entertainment that include 38 ways to tax food and drink, introduced by the then-treasurer Paul Keating in 1985. The ATO had denied Amway substantial tax deductions, arguing the food and drinks were "more than sustenance and indeed were lavish"
Justices Graham Hill, Ross Sundberg and Susan Kenny stated that whether food or drink was "entertainment" did not depend on a person's subjective purpose but the character of the expense.
The case raises the prospect of more seminars and conferences being held at exotic locations.
MIAA Code of Alternative Forms of Remuneration
Mortgage brokers who are members of the Mortgage Industry Association of Australia (MIAA), like politicians, soon will be required to disclose to consumers any non-monetary benefits they receive, such as gifts, tickets to sporting events or holiday travel.
The MIAA issued its Code of Alternative Forms of Remuneration today after nine months of discussion, development and feedback from members. The industry organisation is giving its members two months to put systems in place to implement the new code.
"The MIAA code requires our members to disclose in writing to customers any gifts or other forms of remuneration that could be reasonably expected to influence the finance broker’s recommendation," MIAA Chief Executive, Phil Naylor, said.
The new code requires disclosure of benefits of more than $300 such as:
- sponsorship of seminars, conferences and functions;
- gifts;
- payment of office rent;
- accommodation and entertainment;
- travel;
- cash payments and/or goods;
- computer hardware and software costs; and
- competitions in which a broker or loan writer might be eligible to win a prize, subject to achieving volume-related targets.
The code applies to broker groups as well as individuals and the MIAA are asking each group to maintain a register of details of any alternative remuneration received.
Breaches of the new code will be treated as breaches of the MIAA Code of Practice and dealt with under the association’s disciplinary rules or by the Credit Ombudsman.
Despite MIAA's efforts, ASIC has criticised the code for being too lenient and for only requiring certain types of commissions to be disclosed.
A copy of the code is available from www.miaa.com.au.