The Tax Office isn’t the biggest fan of fun.
Their Christmas gift to us?
Parties, staff gifts and client gifts can all be taxed differently.
The last thing you want for Christmas is a lump of coal, or a surprise tax bill, so here’s the quick version:
Staff party onsite: Food and drink for current employees, on your premises on a working day, is generally FBT-free.
Staff party offsite, under $300 per person: If it qualifies as a minor and infrequent benefit (ie no regular pattern of similar events over the course of the year), there’s generally no FBT, but usually no tax deduction either.
Staff party offsite, $300+ per person: FBT generally applies, but the cost becomes tax deductible. Watch out though, FBT can easily outweigh the value of the deduction.
Gifts <$300: The party and the present are separate benefits, so each gets its own $300 minor-benefit test.
Non-entertainment gifts: Things like hampers, wine and many gift vouchers can generally be tax deductible, with the FBT treatment depending on the circumstances.
Entertainment related gifts: Movie, theatre or sporting tickets are generally treated as entertainment, so different rules apply.
The takeaway?
You can absolutely put on a great Christmas party and spoil the team. Just get the mix right so the Tax Office doesn’t end up enjoying Christmas more than you do.
If you’re unsure what applies to your Christmas plans, give us a nudge before you book it.