'Tis the season to be jolly! But ho-ho-hold up before you start making spirits bright and rewarding your employees with gifts or parties this Christmas, as fringe benefits tax (FBT) may apply when providing all the trimmings.
So you don't get your tinsel in a tangle for your work Christmas party, consider:
how much it costs
where and when it is held - a party held on work premises on a normal work day is treated differently to an event outside of work
who is invited - is it just employees or are partners, clients or suppliers also invited?
Similarly, where you provide Christmas gifts, you’ll need to consider:
the amount you spend
the type of gift - gifts such as wine or hampers are treated differently to gifts like tickets to a movie or sporting event
who you are giving the gift to - there are different rules for employees and clients/suppliers.
Fringe benefits tax and Christmas parties:
There is no separate fringe benefits tax (FBT) category for Christmas parties and you may encounter many different circumstances when providing these events to your staff.
Fringe benefits provided by you, an associate, or under an arrangement with a third party to any current employees, past and future employees and their associates (spouses and children), may attract FBT.
For more information please feel free to contact our AGC taxation professionals. They are rich in taxation knowledge and experience across Australia, experts in dealing with complicated taxation matters and offer exceptional support and advice.
Adapted from ATO article Fringe benefits tax and Christmas parties