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
