Christmas Parties and FBT
As the end of the year approaches, gifts and parties are likely to become a focus for your business. As always, we are here to remind you of your tax obligations and assist you in making informed decisions.
Christmas Parties and FBT
As the holiday season approaches, it is important to be aware of the potential tax implications of your end-of-year celebrations. We want to ensure that you are fully informed about the possible Fringe Benefits Tax (FBT) consequences associated with Christmas parties and employee gifts.
Christmas Parties
Below are common scenarios and their tax implications for work Christmas parties:
1. Party Held on Business Premises
> If the party is for current employees only, no FBT is payable. However, you cannot claim an income tax deduction or GST credits.
> If the party includes employees and their associates or clients, the cost per head will determine the tax treatment:
> Less than $300 per head: No FBT is payable, but you cannot claim an income tax deduction or GST credits.
> More than $300 per head: FBT is payable on the amount attributable to employees' associates (such as their spouse or partner). This amount is tax-deductible, and you can claim GST credits. Other amounts are not subject to FBT but are also non-deductible, with no GST credits available.
2. Party Held Away from Business Premises
> Less than $300 per head: No FBT is payable, but no income tax deduction or GST credits can be claimed.
> More than $300 per head: FBT is payable on the cost for each employee and their associate. You can claim an income tax deduction and GST credits.
- If clients attend the party and the cost exceeds $300 per head, no FBT is payable, and no income tax deduction or GST credits can be claimed.
- If the party costs less than $300 per head and guests are given a non-entertainment gift (such as a hamper), the gift is tax-deductible, and you can claim GST credits.
Christmas Gifts
Non-entertainment Christmas gifts for employees, such as hampers, bottles of wine, gift vouchers, or flowers, are exempt from FBT if their value is less than $300. This allows you to show appreciation without the added tax burden.
If you are unsure about how FBT applies to your holiday gifts and events, please get in touch. We can provide tailored advice to help you navigate these tax considerations efficiently.
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