'Tis the season to be jolly!  Not if the tax office has anything to do with it.

If you are providing something such as entertainment (Christmas Parties) and Gifts to staff members, Fringe Benefits Tax is likely to apply.

What?  It is true.  There are rules around whether you can claim the expense as a tax deduction, claim the GST, or possibly a tax exemption. The following table can give you a guide to how to treat common expenses at this time of year.  To ensure you are not paying more Fringe Benefits Tax than you should, contact us to discuss your personal situation.

CHRISTMAS ENTERTAINMENT GUIDE
Description EmployeeAssociate (eg Spouse)Spouse)Non-Employee  (eg Client)
1. Christmas party on business premises   
a) Social functions - food & drink (with or without alcohol) - under $300Non-DeductibleNon-DeductibleNon-Deductible
GST not claimableGST not claimableGST not claimable
No FBTNo FBTNo FBT
    
b) Social functions - food & drink (with or without alcohol) - more than $300Non-DeductibleDeductibleNon-Deductible
 GST not claimableGST claimable GST not claimable
No FBTFBTNo FBT
    
2. Christmas party on external premises   
a) Hotel, restaurant or club - under $300Non-DeductibleNon-DeductibleNon-Deductible
GST not claimableGST not claimableGST not claimable
No FBTNo FBTNo FBT
    
b) Hotel, restaurant or club - more than $300DeductibleDeductibleNon-Deductible
GSTGSTGST not claimable
FBTFBTNo FBT
    
3. Christmas Gifts   
a) Under $300, irregularly provided and not entertainment (ie flowers ok, but wine or movie tickets considered entertainment)DeductibleDeductibleDeductible
GST claimableGST claimableGST claimable
No FBTNo FBTNo FBT
    
b) $300 and over (no entertainment) or regularly providedDeductibleDeductible Deductible
GSTGST GST
FBTFBTNo FBT
    
c) Gift consists of entertainment $300 and overDeductibleDeductibleNon-Deductible
GSTGSTGST not claimable
FBTFBTNo FBT