Christmas Parties

Shelly Blog

Thinking of hosting a Christmas Party for your staff?

Christmas is a great time to thank your staff for their hard work and celebrate the success of your business. Many business will buy a small gift or fund a staff Christmas party.

Have you considered the fringe benefits tax implications for the Christmas party and if you can claim it as a business expense. Here are some tips to help you decide, however it is always best to seek advice from your accountant.

 

The cost of providing a Christmas party is income tax deductible only to the extent that it is subject to Fringe Benefits Tax (FBT). Therefore, any costs that are exempt from FBT (that is, exempt minor benefits and exempt property benefits) cannot be claimed as an income tax deduction.

Entertaining Clients

The costs of entertaining clients are not subject to FBT and are not income tax deductible.

Christmas party held on the business premises during work hours:

A Christmas party held during work hours on site for current employees will generally be exempt from FBT.  The cost of clients and associates attending the Christmas party is not exempt, unless it is a minor benefit.

Christmas parties for employees:

If you hold a Christmas party offsite, it may be a minor benefit and exempt from FBT if the cost per employee is less than $300.  The costs for an associate of the employee may also be treated as a minor benefit and exempt from FBT if the cost is less than $300 each.

Giving gifts to employees:

The cost of giving a gift to your employees may also be a minor benefit that is FBT exempt where the value of the gift is less than $300. If the gift is given at the Christmas party, the combined value of the gift and the party must be less than $300

For further information:

https://www.ato.gov.au/General/Fringe-benefits-tax/In-detail/Fact-sheets/FBT-and-Christmas-parties/?page=2