AUTHOR: STEVE RYAN…
I’m not meaning to sound like the Grinch of Christmas, but there are several tax implications a business owner should be aware of when organising a staff Christmas party. The most notable tax implication is FBT (Fringe Benefits Tax). Employers must pay FBT at a rate of 49% of the value when certain non-cash benefits are supplied to their employees and associates (spouses and children). An employer must pay FBT associated with staff Christmas parties where the total cost of the party per employee is $300 or more. If this condition is met, the Christmas party will also be tax deductible for the business. Exemptions to FBT in respect of Christmas parties occur where:
- Exempt property benefits exist; and
- Being under the $300 per person threshold.
Exempt property benefits: The costs such as food or drink associated with Christmas parties are exempt from FBT if they are provided on a working day on your business premises and consumed by current employees. The property benefit exemption is only available for employees, not associates. Below includes eligible and exempt FBT examples that an employer may be exposed to:
|Current employees only attend at a cost of $195 per head||There are no FBT implications as the minor benefits exemption applies.*|
|Current employees and their associates attend at a cost of $180 per head||There are no FBT implications as the minor benefits exemption applies.*|
|Current employees, their associates and clients attend at a cost of $365 per head||
*Where the benefits are indicated as qualifying for the minor benefits exemption, it is on the basis that the necessary conditions have been satisfied. We recommend you If you are planning to hold a work Xmas party you keep the above in mind and should you have any queries please contact our office.
This article appeared in our October 2017 newsletter