The Christmas Season is well and truly upon us! Santa’s moved in (which means an extra 20 minutes to the shopping trip with kids while you say ‘hello’) and the staff parties have begun.
We find a lot of businesses get really confused as to what they can/can’t claim and if there are any Fringe Benefits Tax consequences to the entertainment they provide to their staff and associates as a result of Christmas festivities.
It’s no wonder as the rules are confusing and have various elements.
There are a few variables when it comes to determining if entertainment is subject to FBT and these include:
– Location – in-house or held off premises
– Cost per head – under $300 is considered a ‘minor benefit’
– Who is invited – employees only or are family members included
For ease of reading we have created a table below showing varying circumstances based on the above. In general, if your total cost per head is under $300 the costs are likely to be exempt from FBT, however there is no income tax deduction available and therefore also no GST is claimable.
|In house/ Off site||Cost per Head||Who are the Guests||FBT Applicable?||Deductible?|
|In House||Under $300||Employees||No||No|
|In House||Under $300||Associates||No||No|
|In House||Under $300||Clients||No||No|
|In House||Over $300||Employees||No||No|
|In House||Over $300||Associates||Yes||Yes|
|In House||Over $300||Clients||No||No|
|Off Site||Under $300||Employees||No||No|
|Off Site||Under $300||Associates||No||No|
|Off Site||Under $300||Clients||No||No|
|Off Site||Over $300||Employees||Yes||Yes|
|Off Site||Over $300||Associates||Yes||Yes|
|Off Site||Over $300||Clients||No||No|
What about staff gifts?
These are considered separately to the party but are an associated benefit so the $300 is taken overall including the party and the gift. If these totals are under $300 and ‘infrequent’ then they will be exempt from FBT but also not be deductible.
Our general advice to clients is to endeavour to keep any costs and associated costs of Christmas celebrations under the $300 per head threshold. This avoids FBT which can be costly not only to pay but it’s also another lodgement that most businesses would happily avoid.
This is general information. We always recommend you seek advice for your individual situation from your advisor.