Business Christmas Parties and Fringe Benefits Tax

‘Tis the season to be jolly – but are you going to have to pay tax on that? RBF Members The Diligent Group have provided us with this information:

If you hold your office Xmas party at your office, premise or worksite, then the costs such as food and drink are exempt from Fringe Benefits Tax. The things that must be met here is that the Xmas party is held on a work day, provided to your employees, and is held on your business premises or worksite. If these conditions are met then your business is not subject to fringe benefits tax but you do not get a business deduction for the costs.

What if you allow your staff to bring their partners or you invite associates?
When it comes to Xmas parties it may seem strange that there is no separate category to help us determine the tax implications. The type of benefit you provide determines the fringe benefits tax implications i.e. onsite staff parties compared to client lunches.

The second broad tax implication is that the costs associated with your Xmas event is only deductible to the extent that it is subject to fringe benefits tax. What this means simply is that if you hold a fringe benefit exempt staff party, then there is no fringe benefits tax imposed on your business AND no tax deduction for the expenses incurred.

For more information contact Steve Wilson and the team at The Diligent Group on 9817 3000.