Christmas in July? or in December? Either way Christmas party planning is a regular past of business life and employers may be considering gifts for staff and their families. The key is to ensure that your Christmas cheer does not leave you with a FBT hangover.
The general position is that if a Christmas party is not held on your premises and the cost per employee is less than $300 per head ($150 per head if partners attend), it is classed as a minor benefit and no FBT is payable. The function is, however, classed as 'entertainment' and as such no GST or tax deduction will be claimable.
- If the function is held on your premises on a work day for employees and it includes a light meal but no alcohol then no FBT is payable and GST and a tax deduction can be claimed.
- If however, the function is held on your premises on a work day with the employees' families and alcohol is supplied (with the cost per employee being less than $300 per head), no FBT will be payable but no GST or tax deduction can be claimed either.
- If this style of function exceeds a cost of $300 per employee then FBT is payable on the family portion and a tax deduction is claimable only for the portion for which FBT is payable.
- Gifts to employees may be provided at the same time as the Christmas party without being included in the $300 minor benefit cost allowed for the party.
- So long as the gifts are less than $300 and are not classified as 'entertainment' (Eg: Concert tickets) then no FBT is payable and GST and a tax deduction can be claimed on these items.
With this information in mind, you can enjoy a tax effective Christmas party season! - whenever that is for you.
Want to know more, ask your accountant or visit the ATO Minor Fringe Benefit exemption page here.
HO HO HO .