It’s time to spread the Christmas cheer to your staff and clients. But be warned, the ATO has limits to just how generous you can be when it comes to fringe benefits tax (FBT). Here’s a few tips to give back and remain tax effective this Christmas.
Host the Christmas Party at your workplace – Expenses such as food and drink are exempt from FBT for “employees” with no dollar limit, but no tax deduction or GST credit can be claimed.
If you decide to host off site – keep the cost of celebrations below $300 per person (this includes all costs such as food, drinks, venue hire, entertainment, production).
Taxi rides are FBT free if they start or finish at an employee’s workplace.
The costs of entertaining clients are not subject to FBT and are not income tax deductible.
Whether you buy your employees a ‘non-entertainment’ or physical gifts such as hampers, wine, voucher etc or an ‘entertainment’ or experiential gifts such as tickets to concerts, movies or sporting events – the rule is the same – no FBT is applied if gift is under $300 (GST inclusive), and no tax deduction is allowed and no GST credit can be claimed.
And here’s a quick tip! Be sure to hand out your Christmas gifts at a separate time to your Christmas party otherwise the $300 per person limit applies to the total cost both party and gift.
If you’re planning on gifting your clients, suppliers or contractors then No FBT applies to both types of gifts, but you claim a tax deduction and GST input credits only on ‘non-entertainment’ gifts.