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What the ATO has to say about Christmas parties and client gifts

Christmas time comes with parties, food, gifts, food, parties and more food. All that entertaining can become pretty taxing, not only for your belly, but for your wallet, especially when the entertainment is for clients and staff. Luckily, some expenses are exempt from fringe benefits tax (FBT).

When the ATO talks about entertainment, they mean providing food drink or recreation (golf, movie tickets, or a harbour cruise), providing accommodation, or reimbursing expenses. When providing food and drink to employees or clients in the name of entertainment, tax exemptions can sometimes be made. We’ve done the research and found the top resources for you to figure out if some of those expenses are free from tax obligations at tax time. 

  1. Learn how to reduce the FBT you pay (in some cases, your FBT payable could be reduced to nil).
  2. Find out if the entertainment that is being provided is exempt from FBT.
  3. Take a look at what records to keep to give to your accountant at tax time.