Fringe Benefits tax & Christmas parties

The following explanations may help you determine whether there are FBT implications arising from a Christmas party.

Christmas parties -There is no separate fringe benefits tax (FBT) category for Christmas parties. Fringe benefits provided by you or a third party to any current employees (including spouses and children), may attract FBT.

Gifts provided to employees at a Christmas party-Where a Christmas gift is provided to an employee at a Christmas party that is also provided by the employer, the benefits are associated benefits, but each benefit needs to be considered separately to determine if they are less than $300 in value, if both the Christmas party and the gift are less than $300 in value, they will both be exempt benefits.

Tax deductibility of a Christmas party -The cost of providing a Christmas party is income tax deductible only to the extent that it is subject to FBT. Therefore, any costs that are exempt from FBT (that is, exempt minor benefits and exempt property benefits) cannot be claimed as an income tax deduction.

Entertaining clients-The costs of entertaining clients are not subject to FBT and are not income tax deductible.

Christmas party held on the business premises- A Christmas party provided to current employees on your business premises or worksite on a working day may be an exempt benefit. The cost of associates attending the Christmas party is not exempt, unless it is a minor benefit.

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