Christmas Parties Can Be Taxing
It's beginning to look a lot like Christmas, and
with the arrival of the silly Season comes'
Christmas parties. Let’s not forget amongst all
the fun, that there is always a tax implication,
and this time it’s Fringe Benefits Tax. FBT is a
complex tax filled with so many ‘ifs’ and ‘buts’
it is very difficult to navigate.' Here are some questions we’ve received
lately that may help you out:
Q: I am planning to have a large Christmas
party for all the staff this year, but I am
concerned about FBT – what are some things I
should be aware of? And do gifts count as Fringe
If you are planning your party this year, first
think about where you would like it to be held –
parties and functions held on premises on
working days, for employees, can be considered
excluded benefits, and as such not liable for
FBT. So first ask whether there is room for
everyone on site. If you want to go offsite
and/or invite employees’ partners, then you
should be aware of the minor benefits
exemption*. So long as the total expenditure per
person – including partners of employees – is
less than $300, no FBT is payable. The trick
here is to keep strong records of your event.
Make sure all staff are checked off on arrival
and their partners/families too – it makes FBT
time (year end 31 March) much easier!
Gifts to employees can be caught by FBT. But
once again, the minor benefit exemption can
apply and so long as the gift is less than $300
per person, it is most likely exempt from FBT.
When figuring out the total spend per person,
note that the party is separate from the gift –
so you can spend up to $300 per person on the
party, and $300 per person on gifts – which
should work out to be one great Christmas party.
Q: Is the Christmas party tax deductible
The shortcut guide is if the expense is classed
as entertainment, only if you paid FBT on it,
may it be deductible. Note that where no FBT is
paid, as you satisfied the minor benefits
exemption explained above for example, then
costs would not be considered deductible. The
exception is non-entertainment gifts which can
still be tax deductible.
As mentioned, FBT can be painful to negotiate –
there are no hard and fast rules. The best
advice is to keep good records of all your
expenditure around this time of year and if in
doubt consult your accountant.
*Note that if you elect to utilise the 50/50
split method for meal-entertainment you can not
take advantage of the minor benefits exemption.
This advice is general in nature and readers
should seek specialist advice before making
financial decisions. WHK Pty Ltd ABN 84 006 466
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