Don’t let your Christmas generosity cause unwanted tax for your business

When celebrating Christmas with your staff in the form of Christmas parties or gifts, be sure to keep accurate record as certain scenarios may attract Fringe Benefit Tax (FBT). Since 1986, the FBT system has existed in order to tax on things on the fringe, as the name suggests or outside of your salary package.

There is no separate FBT for the Festive Season however you may encounter several different circumstances when providing these events to your staff. This could also include fringe benefits provided by you to past and future employees and their associates (spouses and children), an associate or those under an arrangement with a third part to any current employees.

Implications for taxpaying body

If you are not a tax-exempt organisation and do not use the 50-50 split method for meal entertainment, the following scenarios may help you determine whether there are FBT implications arising from a Christmas party;

• Exempt property benefits
• Exempt benefits – minor benefits
• Gifts provided to employees at a Christmas party
• Tax deductibility of a Christmas party
• Christmas party held on the business premises
• Christmas party held off business premises

Implications for tax-exempt body

If you are a tax-exempted organisation the following situations may be relevant in determining the possible FBT implications arising from a Christmas party.

• Gifts provided to employees at a Christmas party
• Christmas party held on business premises
• Christmas party held off business premises

Understanding the Fringe Benefits Tax implications can be confusing and for a merrier Christmas your awareness of FBT and having accurate record keeping is important. Before planning your Christmas party, staff and client gifts please call us for advice.

Do you have any questions or concerns about this topic? Get in touch with us today. Call 02 9515 1511 or send an email.