Throwing a tax-smart Christmas party
Planning a Christmas party for your team? The tax treatment of your event depends on factors like location, cost, and who’s attending.
1. Hosting at the office:
Good news if you're planning an in-office party! If your event is held on a workday, FBT (Fringe Benefits Tax) is unlikely to apply to food and drinks. Even better, taxi rides to and from the party that start or end at work are also FBT-free.
2. Hosting off-site:
If you're thinking of an off-site venue, keep the per-person cost under $300 to stay within the FBT minor benefit limit. This way, you can avoid FBT, but remember—you won’t be able to claim a tax deduction or GST credits for the party.
3. What about more extravagant parties?
If the cost goes over $300 per person, FBT will apply. The upside? You can claim both a tax deduction and GST credits for the event. Balancing the budget and benefits here could be key to making the right call!
Getting gifts right
Gifts are a great way to spread holiday cheer. However, the tax treatment of gifts depends on who you’re giving them to and what kind of gift you choose.
1. Gifts for clients:
When it comes to clients, stick with items that aren’t for entertainment. For example, a thoughtful hamper, a bottle of wine, or gift cards are tax deductible, as long as the gift is tied to potential business benefits.
On the other hand, entertainment gifts—like dinners, event tickets, or golf days—are not tax deductible. Keep this in mind when choosing how to show your appreciation.
2. Gifts for employees:
For your team, aim for gifts under $300 per person to avoid FBT. These could include vouchers, small gadgets, or gift baskets. Gifts should be spontaneous and one-off, not part of a regular or ongoing reward program.
Thinking of giving cash bonuses this year? While generous, these count as salary, so they’re taxed like regular income.
What about client entertainment?
If your holiday plans include catching up with clients over lunch or drinks, it’s important to know that entertainment expenses are not tax deductible. Whether it’s a Christmas celebration or a casual catch-up throughout the year, the ATO doesn’t allow deductions for food, drink, or other social entertainment expenses.
The finishing touches
With some careful planning, you can enjoy the holiday season without worrying about unexpected tax issues. Whether it’s keeping your Christmas party under the FBT radar or choosing tax-deductible gifts, understanding the rules can help you celebrate smart.
Want to make sure your business is on the right track with tax compliance this festive season? Get in touch with our expert team at LEAD Advisory Group. We’re here to help your business enjoy a financially stress-free end to the year while keeping the ATO happy.
Here’s to celebrating safely, responsibly, and with confidence this Christmas!
With just a little planning, you can make the holidays magical for your team and clients while staying financially savvy. From all of us at LEAD Advisory Group, we wish you a successful end to the year and bright opportunities ahead!
