The purpose of this statement is to provide guidelines on the authorized 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 unauthorized 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 ATO rules.
The MEC is provided to employees as part of the salary packaging arrangements at your Employer. 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.
• Drinks/food at a bar or nightclub.
• Purchases of food or drink for a party, BBQ, etc.
• Drinks/food while on holidays at a resort/hotel, etc.
• Taxi travel to a club/restaurant, etc. for the purposes of obtaining food/drink.
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.
• Foreign currency transaction charges when the MEC is used to pay for expenses overseas
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 Employee Benefits Card, if they have one.
5. What an Employee can’t pay for with the MEC?
Employees should also not 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.
6. How are overseas transaction charges on the card treated?
The MEC may be used to pay for qualifying meal entertainment expenses incurred overseas. However if used overseas, all transactions will incur a foreign currency transaction fees which will be separately identified on the MEC monthly statement.
The following outlines the audit procure and sanctions that will apply for unuathorised use of the MEC.
1. Simplygreen will randomly audit employee card statements provided by Westpac.
2. 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 supermarket.)
3. The annotation needs to clearly explain the entertainment connection of the food or drink purchased (eg for birthday party on such and such date)
4. 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. (eg taxi travel for meal at such and such restaurant on such and such date).
5. Simplygreen may request further information from the employee where the information provided together with the statement is not adequate.
6. 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.
Sanctions for Unauthorised Use of the MEC
Employees are hereby put on notice that in the event of the use of the MEC to pay for unauthorized expenses, your Employer may cancel the employee’s card without further notice and disqualify the employee from applying for another MEC for a period of time determined at the discretion