“While we welcome the concept of a cap on entertainment packaging, there should also have been some recognition of the fact that this benefit is relied on by the NFP sector to ‘top up’ salaries, particularly as the real value of other salary packaging (with caps that are not indexed) has diminished over time. This situation could have been recognised with a higher cap or with some other benefit handed directly to the sector,” said Lucas.

A number of transitional issues arise, principally:

• Where employees are reimbursed entertainment expenses, given the concession is uncapped until 1 April 2016, consider whether you will allow prepayments (e.g. holidays) to be salary packaged and what your process will be to determine whether the holiday is taken or refunded and whether any tax adjustments need to be made.
• If employees have accrued salary sacrifice balances for entertainment not yet taken at 31 March 2016, consider whether these need to be paid out in full, or whether some can be carried forward.

“While we welcome the concept of a cap on entertainment packaging, there should also have been some recognition of the fact that this benefit is relied on by the NFP sector to ‘top up’ salaries, particularly as the real value of other salary packaging (with caps that are not indexed) has diminished over time. This situation could have been recognised with a higher cap or with some other benefit handed directly to the sector,” said Lucas.

A number of transitional issues arise, principally:

• Where employees are reimbursed entertainment expenses, given the concession is uncapped until 1 April 2016, consider whether you will allow prepayments (e.g. holidays) to be salary packaged and what your process will be to determine whether the holiday is taken or refunded and whether any tax adjustments need to be made.
• If employees have accrued salary sacrifice balances for entertainment not yet taken at 31 March 2016, consider whether these need to be paid out in full, or whether some can be carried forward.