Christmas cheer (and how to treat it for tax)
We’re hitting the peak staff Christmas party and gift giving time of the year so we wanted to provide a few guidelines on how any expenditure related to this should be treated:
- Any Christmas function for staff and clients whether on or off your business premises is 50% deductible. The other 50% is considered private expenditure.
- Gifts provided to employees are subject to fringe benefit tax. There is an exception though; the benefit will be an unclassified fringe benefit and will therefore not be subject to FBT if the amount of the benefit is under certain expenditure levels.
For employers paying FBT on a quarterly basis, no FBT is payable if:
- the aggregate taxable value of unclassified benefits provided to each employee does not exceed $300, and
- the total taxable value for the past four quarters of all “unclassified benefits” provided by an employer, or an associated person, to all its employees does not exceed $22,500.
For employers accounting for FBT on an annual or income-year basis, the total value of unclassified benefits must not exceed:
- $1,200 per employee per annum, and
- $22,500 per employer per annum
If you have any questions whatsoever about your specific circumstances please don’t hesitate to contact us. We’ve got Christmas entertainment covered!