Christmas and the Tax Office

Apart from giving businesses a chance to thank their employees for a job well done over a difficult year, end of year Christmas celebrations are also an opportunity to get everyone together for some fun and socialising. While you should feel free to pop a champagne cork or three for employees, make sure that you don’t get a tax hangover.

Not that the taxman doesn’t know how to have fun. The ATO may be prudent, but there is still some wriggle room to let your hair down. Christmas-time entertainment up to the value of $300 (including GST) for each employee and their associates is generally exempt from FBT under the ‘minor benefits’ rule.
If you hold a Christmas party on the business premises during a working day and provide food and drinks, it should be FBT free if only employees are attending. If spouses or partners are invited, the cost should still be FBT free if less than $300. If the party is held off-premises (e.g. a restaurant or a pub), the $300 limit applies to both employees and associates.
There is also a Santa-inspired tweak to the ‘minor benefits’ rule in that the threshold of $300 is applied for each benefit provided. So, if you also give a gift to employees (such as, hampers, gift vouchers, flowers and wine) the party and the gift are both considered separately for FBT. If each is less than $300, they are both generally FBT free.
Not sure whether you have to pay the taxman for providing the Christmas cheer? Contact the Deloitte NT Taxation Advisory Group who specialises in providing tailored advice to organisations on the complexities of various tax laws, including Employment Taxes, Income Tax, GST, R&D Tax Incentives, and Fuel Tax Credits.

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Karen Green
Partner, Taxation Advisory Group
Ph: (08) 8980 3028
E: kgreen@deloitte.com.au
Gaurav Sareen
Director, Taxation Advisory Group
Ph: (08) 8980 3075
E: gsareen@deloitte.com.au