Christmas celebrations and FBT
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Are you?
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- An employer planning a Christmas party for your staff?
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At a glance:
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- As the festive season approaches, businesses must consider the operation of Fringe Benefits Tax [FBT] when organising Christmas functions for employees and their associates.
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You should:
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- Be aware of the FBT exemptions that may apply to your staff Christmas Party.
- Contact us if you require any clarification or advice.
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- With Christmas fast approaching and thoughts turning to Christmas parties and year end celebrations, employers need to remember that the provision of 'meal entertainment' to employees may have FBT implications.
- The Tax Office states that meal entertainment' includes:
· The provision of entertainment by way of food and/or drink (e.g. restaurant meals and alcohol); and
· The provision of accommodation or travel in connection with this entertainment (e.g. taxis fares).
- Below is a summary of the tax implications of Christmas functions:
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Event
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FBT?
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Tax Deduction?
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Claim GST?
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Purchase employee gift costing less than $300
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No
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Yes
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Yes
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Purchase employee gift costing more than $300
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Yes
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Yes
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Yes
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Party held on premises regardless of cost per head for employee
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No
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No
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No
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Party on premises - spouse
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Only if benefit is more than $300 per head
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Only if benefit is more than $300 per head
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Only if benefit is more than $300 per head
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Party off premises - employees & spouses
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Only if benefit is more than $300 per head
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Only if benefit is more than $300 per head
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Only if benefit is more than $300 per head
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Benefits provided to clients
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No
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No
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No
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Remember:
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- Careful planning may assist employers in avoiding a FBT liability this festive season.
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