Remunerator News

Nov 1 2019

Make sure the Tax Man doesn’t Gatecrash your Xmas Party!

The ATO have stated that employers could be taxed if they host Christmas parties when the free food, alcohol, hotel accommodation and travel exceed the specified threshold.
As stated on their website, there is no separate FBT category for Christmas parties.

This rule applies to ‘for-profit’ companies, Not-for-profit and charities are exempt from paying the FBT.

Here’s a quick break down of exempt benefits:

  • The costs 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 provision of a Christmas party to an employee may be exempt it the cost of the party is less than $300 per head.
  • The provision of a gift to an employee at a Christmas time may be exempt where the value of the gift is less than $300.
  • The cost of providing a Christmas party is income tax deductible only to the extent that it is subject to FBT. Cost that are exempt from FBT cannot be claimed as an income tax deduction.
  • The costs of entertaining clients are not subject to the normal FBT rules for Entertainment.