Recreation facilities tax

The cost of providing in-house recreation facilities to employees is deductible if it is located on the employer’s premises. Examples of in-house recreational facilities are a tennis court, a swimming pool, gymnasium or games room provided on an employer’s premises for staff use on work days. 

The employer can claim a deduction for the expenses incurred and the benefits provides to the employees is exempt from FBT under s 47(2). 

If the employer is a company, the recreational facility may be located on the premises of a related company. This is a good strategy that employers can use to provide a tax-free benefit to employees that assists with staff recruitment and retention.