Updated: Nov 17
As we go ALL IN to the festive season, we know businesses are gearing up for Christmas parties and gifts so let's make sure we cover off on the tax implications (yep, unfortunately so). So here's our straightforward guide to help you avoid any tax surprises and stay on the nice list with the taxman-ian devil
1. Holding a Workplace Christmas Party? Keep it Simple
Host the party on a working day.
Keep it on your business premises.
Limit it to current employees.
Do this and you won't incur Fringe Benefits Tax (FBT) for the food and drink provided - PHEW!
At this point you may be asking what the heck is FBT? Well we have you covered there, read this blog to find out more.
2. Off-site Parties and Associates? Thinking of going a little more fancy? We hear you. Of course you can! If the party goes off-site or includes associates (eg, partners), you're still safe from FBT as long as it's considered a minor benefit (costing less than $300 incl GST per person).
3. Including Clients? why not! it will be FBT-Free Celebrations all the way - yippee!
If clients join the festivities, the costs related to them won't attract Fringe Benefits Tax (FBT) so enjoy the party without worrying about additional tax burdens.
4. Thinking about Christmas Gifts for Employees? Keep it under $300 (incl GST) per person and non entertainment, like gift baskets, gift cards and flowers, and they are FBT-free also, plus they are tax deductible and you can claim the GST credit (YAS! the triple whammy) so stay within this limit to avoid any unwanted tax implications. Thinking about paying them a bonus, well that's a whole different ball game and you may want to check out our blog on this one too (yep we have blogs for everything).
5. How about Christmas gifts for clients? Go to town friends, there are no FBT implications on gifts provided to clients no matter the cost. Opt for 'non-entertainment' gifts though so you can claim a tax deduction and GST credits AND of course it was purchased to strengthen business relationships and increase the chances of future collaboration 😉. 'Tis the season for strategic giving without the tax hassle!
6. Now it's important to note that just because the expense may not attract FBT, the kicker is that in most circumstances it will NOT be tax deductible and you can't claim GST credits. Way Harsh we know ...
So make sure to follow these festive guidelines to navigate the tax maze and ensure your holiday season is as merry and tax-light as a Christmas tree! Wishing you a season filled with joy, laughter, and entertainment that's more entertaining than a holiday office party blog! (we get it 😉)
Still have questions? That's OK, feel free to make contact with one of our oh so cool not nerdy at all team members today.
Disclaimer: The information provided is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice