Christmas parties, presents and Fringe Benefits Tax
With Christmas just around the corner we’re sure the work Christmas party and preparation of gifts for your employees and clients is well under way. However, before plans are set in stone it is important to understand the implications of Fringe Benefits Tax (FBT) on these Christmas festivities.
We have summarised below these implications to help prevent unwanted tax consequences this Christmas Season. For a more detailed explanation and examples please see https://www.ato.gov.au/General/Fringe-benefits-tax-(FBT)/In-detail/FBT-and-Christmas-parties/?fbclid=IwAR34syaGfNxmGfgc9uBjGxiMGxJ4Ac3c5BtCIvTaMcFdxnKOPolcnYYwxGA .
Your type of business, where and when the Christmas event will be held, who’s on the guest list and how much it costs, can determine the application or exemption of Fringe Benefits Tax on your Christmas party.
For example, for a tax-exempt body, costs such as food and drinks associated with the Christmas Party are exempt from FBT, as long as, they are held at the business premises on a working day and consumed by current employees. If the invitation extends to associates, clients or suppliers, FBT would then be determined by the ‘per head’ cost of the event. If the event is held ‘off-business’ premises, then new conditions would apply and therefore new implications.
Giving your employees a Christmas gift is the perfect way to show how much you value them and gain extra tax deductions.
However, Fringe Benefits Tax should be considered when buying gifts over $300. Gifts under $300 may be eligible for minor benefits, however if they are recreational, no tax deductions or GST can be claimed.
Gifts to clients are tax deductible and not subject to Fringe Benefits Tax given they are a genuine gift e.g. a bottle of wine. If you were to take your client out for a Christmas lunch, your portion of this may be subject to fringe benefits tax.
If you need to discuss this in more detail just give us a buzz and we can help you with any concerns you may have.
In the meantime, from all of us here at Select Accounting we hope you have a great festive season and a very happy new year.