Tip #1: Keep team gifts spontaneous
Instead of gifting your team with monetary bonuses, consider a spontaneous gift within the tax-free threshold of $300. Any amount at or above this level will result in a 47% FBT. This could be a thoughtful gesture such as a personalised gift, a hamper, or a dinner voucher. These gifts will bring joy to your team and keep the taxman at bay.
Tip #2: The FBT Christmas party crunch
The FBT Christmas party crunch can be a costly exercise for businesses. Be it an end-of-year party, team-building event, or a client function. If you want to avoid paying FBT for your Christmas party, host it in the office on a workday. This way, the FBT is unlikely to apply regardless of how much you spend per person. Taxi travel that starts or finishes at an employee's place of work is also exempt from FBT. If your work Christmas party is out of the office, keep the cost of your celebrations below $300 per person to avoid paying FBT. However, if the cost exceeds $300, you can still claim a tax deduction and GST credits for the cost of the event. Be mindful that the minor benefits exemption requires several factors to be considered, including the total value of associated benefits provided across the FBT year.
Tip #3: Avoid client lunches and give a gift
The most tax-effective way of sharing the Christmas joy with customers is to send them a gift rather than entertaining them. Entertainment expenses, such as restaurants, shows, and golf, are not tax-deductible and cannot be reimbursed for GST. However, sending your client a gift is tax-deductible as long as there is an expectation that the business will benefit. Deliberating the gift personally to your best customers can have a more significant impact. Instead of spending a small amount on every customer, focus on the customers you believe deliver the most value to your business. If you invest in Christmas gifts, make them memorable and appropriate to your business. You could also opt to donate on behalf of your customers or for your customers.
Tip #4: Charities love cash
During this time of year, donating to charity is common, but research has shown that charities prefer cash donations over material items. This is because cash donations are more flexible and can be used where they are most needed. Donating cash also helps you get a tax deduction. So, consider donating cash to your favourite charity this festive season.
Tip #5: Christmas bonuses
Finally, if you want to give your staff a bonus this Christmas, consider a thoughtful, memorable experience rather than a classic cash bonus. You could buy experiences such as a weekend away, a cooking class, or a wine-tasting experience. This encourages employees to take a break from work and make memories with their families.
Ultimately, there are many ways to save money and manage your finances during the festive season. By applying our tips, you can enjoy a relaxing and enjoyable holiday period without breaking the bank. If you need further advice on managing your finances, LEAD Advisory Group is here to help. Contact us today to discuss your financial needs. Remember, the key is planning and budgeting to make the most of the festivities without financial stress.
