Work parties and gifts – the tax implications

Dec 4, 2019 | Accounting & Bookkeeping, For Business, Tax

It’s definitely the season to deck the halls. Christmas parties, Secret Santa gifts, work drinks and festive ‘feastivity’ is in the air. They are all part of this time of year and we’re definitely not here to spoil your fun, but did you know there are possible tax implications for some of this frivolity? 

Are you aware that Fringe Benefits Tax (FBT) may actually apply to Christmas parties and gifts? 

Here are the basics on FBT and Christmas parties from the ATO: 

  • The costs of food and drink associated with your Christmas parties are exempt from FBT if they are provided on a working day, on the business premises and consumed by current employees. 
  • A Christmas Party may be a minor benefit and exempt if the cost of the party is less than $300 per employee and certain conditions are met. 
  • Christmas gifts to employees may be a minor benefit that is an exempt benefit where the value of the gift is less than $300. 
  • The cost of providing a Christmas party to your employees is income tax deductible only to the extent that it is subject to FBT. 
  • The costs of entertaining clients are not subject to FBT and are not income tax-deductible. 
  • A Christmas party may be a minor benefit and exempt from FBT. Although, if you’re unsure about how you might be affected speak to one of the Nexis team today. 

 

Call us on (02) 6264 800to find out more.