Festive Cheer Without the FBT Fear
What Businesses Need to Know This Christmas
As the business community gears up for the festive season, it’s the perfect time to celebrate your team’s hard work. But before you book the venue or wrap the gifts, here’s what the ATO says about keeping your Christmas celebrations tax-smart.
Hosting a Christmas Party? Here’s the Lowdown
You can spread the cheer without triggering fringe benefits tax (FBT) if:
- The party is on a working day, at your business premises, and only includes current employees.
- It’s off-site or includes partners (associates), and the cost per person is under $300 – this qualifies as a minor benefit.
- You invite clients – costs related to them are not subject to FBT.
Giving Gifts? Keep It Under $300
Christmas gifts for employees are FBT-free if:
- They’re under $300 per person.
- It’s considered unreasonable to treat the gift as a fringe benefit.
No Tax Deductions or GST Credits
If your party is not subject to FBT, you can’t claim:
- Income tax deductions
- GST credits
But you can claim income tax deductions and GST credits for Christmas gifts to staff and clients.
Real-World Example: Office Christmas Lunch
Imagine a company hosts a lunch at its office on a working day. Employees, their partners, and clients attend. The cost per person is $125, including food, drinks, and taxi travel home.
- Employees: No FBT – it’s on-site and during work hours.
- Partners: No FBT – under $300 and considered a minor benefit.
- Clients: No FBT – client-related costs are exempt.
- Tax Deductions/GST: Not claimable for any attendees.
Check out the ATO website for more information: