Be sure that you and your staff don’t have a Grinchy Christmas this year!
Christmas is a great time of year to celebrate with staff, however the Grinch (AKA the ATO) have other ideas.
So you don’t start singing, Oh FBT, Oh FBT, this Christmas, please see below to help you correctly identify the tax treatment of various gifts and parties.
Staff Christmas Gifts
If you are thinking of giving your staff a gift this Christmas, following these few simple guidelines will ensure that you and your staff have a very Merry Christmas.
- Gifts such as Christmas hampers, a bottle of alcohol, perfume, a pen set, flowers or gift vouchers etc. are not considered to be entertainment in nature and are therefore tax deductible. However cash, tickets to attend a play, sporting event, theme park or airline tickets for a holiday are entertainment and considered non-deductible. On top of not being able to claim a tax deduction your entertainment gifts may attract fringe benefits tax (FBT).
- Keep inline with the Minor Benefit Exemption being that, as long as the gift is irregular and infrequent and costs less then $300 (inclusive of GST) they will be FBT exempt.
Staff Christmas Party
All entertainment expenses (such as the work Christmas party) are non-deductible which also means that the GST component can’t be claimed. But will your party attract FBT issues?
- To avoid FBT, ensure the food and drink component is under $300 inclusive of GST per person (this also includes any guests of the staff members) then it will not attract any FBT.
- If you are also thinking of inviting along some valued clients or suppliers, regardless of the cost there is no FBT but no tax deduction either.
Please see the PDF for a more detailed look at staff gifts and entertainment expenses.
If you would like to discuss providing benefits to your employees and there possible tax treatment please contact our office and talk to one of our friendly accountants today.