bah humbug: an expression used to reject something in a disagreeable manner that has been said by another.
Recently I’ve had several Business clients approach me for advice regarding the Tax considerations of providing a Staff Christmas Party. Sadly, the ATO is not as generous as my clients!
It needs to be understood that staff Christmas parties are viewed by the ATO as providing your staff with an Entertainment Fringe Benefit. FBT applies to non-cash benefits provided by employers to their employees.
An FBT exemption applies when the Christmas party is held during regular working hours on your business premises, and current staff attend without their associates – an exempt property benefit. Under such circumstances there is no need to worry about Cost per Head, however no GST credit can be claimed, nor a tax deduction.
An FBT exemption also applies where the Christmas party is held off premises, staff and their associates may attend, but the Cost per Head is less than $300 – an exempt minor benefit. Again, no GST credit or tax deduction can be claimed.
Unfortunately the ATO’s view is that the cost of a Christmas party is only tax deductible if it is subject to FBT.
What about your clients? As they are not your employees there is no FBT. If you provide your clients with a form of entertainment for the Christmas season it’s not tax deductible. If you gift them an item that is not considered entertainment (e.g. a nice bottle of wine, a box of chocolates, a pen set) it is tax deductible if the gift is given with a view that your business will benefit, and is likely to generate income.
To discuss further contact Annie of Mackay and Associates Accounting & Bookkeeping Services on 0412 676 337 or email annie@mackayandassociates.com.au
Published: The Valley Reporter (Roleystone)
Issue: Feb 16/Jan 17