With December just around the corner and the festive season on our radar (WHERE HAS THIS YEAR GONE?!), we’re all determined to save as many pennies as we possibly can. So when it comes to planning that legendary work Christmas party (one that’s obviously going to beat last year’s big bash), you may be wondering what exactly is tax deductible.
Firstly, it is important to understand there is no independent fringe benefits tax (FBT) category for Christmas parties. However, certain aspects of your Christmas party may be exempt from FBT if they can pass as a minor AND infrequent benefit.
Minor Benefits
A minor benefit is defined by the ATO as a benefit that is ‘less than $300 in notional taxable value’ and ‘unreasonable to treat as a fringe benefit’. Hence, you may be able to get some relief against a Christmas party for your company as long as the cost per head does not exceed $300. You can calculate the cost per head by the dividing the total cost of the party by the number of attendees. For example, if the total cost for the party were $2,000 and 20 employees attended, the cost per head would be $100.
Nevertheless, for your minor benefit to be exempt from FBT, you must also determine whether it is considered an infrequent benefit. You can find out if your benefit passes as an exempt benefit on the ATO website.
What’s Deductible?
Items such as food and drink, venue hire, travel, accommodation and tickets for the event are identified as employee entertainment and therefore would be considered a minor benefit, providing their total cost is less than $300 per head. If these minor benefits are offered to existing employees on a working day and on your business premises, they will be exempt from FBT. Any taxi fees from your business premises to the event are FBT exempt for employees, however this does not apply for their associates (partners, friends, family, etc.).
If you would like more information, please feel free to call our experienced accountants on 07 3367 3155. Alternatively, you can contact us via email.
