‘Tis the season, but before you get carried away with presents and end of year parties, there may be tax implications when it comes to the season’s festivities.
Are you aware that fringe tax benefits (FBT) may actually apply to the fun you’ll have at your Christmas party and gift giving?
If you do not have an FBT exemption or concession endorsed by the ATO, and do not use the 50/50 split method for meal entertainment, the following explanations may help you determine whether FBT implications will arise from your Christmas party.
- The cost of food and drink associated with your Christmas festivities are likely to be exempt from FBT if they are provided on a working day, on the business premises, and consumed by current employees.
- A Christmas party or a Christmas gift to employees may be a minor benefit and exempt if the cost is less than $300 per employee and is considered minor, infrequent, and irregular.
- The cost of providing a Christmas party to your employees is income tax deductible only to the extent that is subject to FBT. You may also claim GST credits on the cost associated with the party as well on the same basis.
- The costs of entertaining clients are likely not subject to FBT, not income tax deductible, and not available to claim input tax credits unless the 50/50 split method for entertainment is used.
If you’re unsure about how you might be affected speak to Jacklyn for more information.