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How To Throw A Tax Savvy Christmas Party This Year
15/12/2016

December is an exciting month everyone has been waiting for. Not only for the families at home where there will be reunions, gathering, sharing of gifts, foods and laughters, but also for companies, as many are planning their Christmas party for their staff. However, throwing your office Christmas parties might have some business tax consequences. Thus, it is worthwhile to be savvy this year by educating yourself with what kind of parties which will attract tax and acquiring tax advice from your local tax accountants.

Fringe Benefits Tax (FBT) generally applies where an employer provides a benefit to an employee other than their salary or wages. In most companies arrangement, the benefits of attending a Christmas parties held by the company is not included in the employee’s salary or wages. However, depending on the circumstances of the party, whether it is held on or off the business premises, the FBT might or might not apply. When FBT applies, you will need to prepare fringe benefit tax return Perth and it is always wise to talk to your tax accountants beforehand, due to the complexity of FBT.


When party is held on the business premises

Situation

Implication

Only current employees attend

No FBT implication for employee

Current employees and family attend

with a cost of less than $300 per head (GST incl.)

No FBT implication for both employee and family

 

Current employees, family and clients attend

with a cost of more than $300 per head (GST incl.)

No FBT implication for employee, but there is FBT implication for the family, as it costs more than $300. And it is considered as company’s entertainment expenses for clients.

There is neither tax deduction nor GST claimable in these circumstances.


When party is held off the business premises

Situation

Implication

Only current employees attend

with a cost less than $300 per head (GST incl.)

No FBT implication for employee

Current employees, family and clients attend

with a cost of less than $300 per head (GST incl.)

No FBT implication for both employee and family, as it costs less than $300. And it is considered as company’s entertainment expenses for clients.

Current employees, family and clients attend

with a cost of more than $300 per head (GST incl.)

There is FBT implication for both employee and family, as it costs more than $300. And it is considered as company’s entertainment expenses for clients.

There is neither tax deduction nor GST claimable in these circumstances.


Some companies may find it customary to send a Christmas gifts in addition or in place of holding a party. Gifts are also considered as benefit outside an employee’s salary and wages, thus might fall under the category of FBT depending on the type of gifts. It is best to contact your tax accountants to find out more about the implications of gifts, as the types are assessed differently. Refer to below table as a general guideline.


Non-entertainment gifts (eg. Christmas hampers, liquors, gift vouchers and flowers)

Type

Implication

Non-entertainment gifts for employee and their family

Subject to FBT and income tax deductible,

unless the total cost of the gift is under $300

Non-entertainment gifts for non-employees (clients, suppliers, contractors)

No FBT implication

Income tax deduction is allowed

GST can be claimed


Entertainment gifts (eg. Theatre or movie tickets, tickets to a sporting event, holiday accommodation)

Type

Implication

Entertainment gifts for employee and their family

Subject to FBT and income tax deductible,

unless the total cost of the gift is under $300

Entertainment gifts for non-employees (clients, suppliers, contractors)

No FBT implication

Income tax deduction is not allowed

GST cannot be claimed

 

Bottom line is, it pays to be savvy this season to celebrate Christmas with your comrades, as well as love ones. Not sure whether your plan of throwing party for your staff will be taxable? Call STC Partners, Perth tax accountant to be enlightened more.


Last but not least, STC Partners, your local tax accountant, wish you a Merry Christmas and a prosperous new year! Thank you for your continuous support over the years.


The articles published by STC Partners are for your general guidelines only. Please contact our Perth accountant for a specific query.




Whether you are facing complex tax issues or just need your tax return Perth completed quickly, our consultants are ready to assist you. Call our office today to enquire about tax advice on (08) 9362 1000 or email admin@stcpartners.com.au


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