FBT & Christmas Parties for Employees

The festive season is here and we thought this is the perfect time to refresh business owners on FBT and the tax implications surrounding Christmas parties.

Christmas parties are subject to FBT as it is entertainment, however they can be exempt from FBT as Minor Benefits providing your Christmas party abides by the following tax rules:

Christmas party held ON business premises - the costs (such as food and drink – excluding alcohol) associated with Christmas parties for employees only are exempt from FBT if they are held on a working day, or your business premises and consumed by employees only. So, not only is there no FBT but as an added bonus the entire cost is tax deductible and a GST credit can also be claimed! (If you include alcohol into the above scenario then you will still be exempt from FBT, however the costs are not tax deductible and you will not be able to claim GST).

Christmas party held OFF business premises - the costs associated with Christmas parties for employees which are held off the business premises are exempt from FBT if the cost is not more than $300 per head inclusive of GST, and the minor benefits exemption applies. Any portion above this amount will then be subject to FBT. Unfortunately none of the costs are tax deductible and no GST credit can be claimed.

Call the office on 03 8813 0162 and speak with Bec, Andrew or Navin if you need any further clarification.