The ATO has recently issued Tax Determination (TD) 16/15 indicating that airline lounge fees may be tax deductible and exempt from Fringe Benefits Tax.
I suggest you have a quick read of the TD but in general terms as long as there is some business use then the membership fee should be tax deductible. The TD also states that the expense should be exempt from Fringe Benefits Tax.
So in practice the annual fees will be deductible in full even if there is a significant private use of the lounge membership for employees such as when the membership by employees is used whilst on holiday.
The take away here is the airline lounge fee may be considered for an employee reward without incurring negative tax consequences.
Please Note: Many of the comments in this article are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.