CHRISTMAS & FBT

As we approach the holiday season, some employers will be thinking about recognising their teams’ efforts by celebrating with meals, entertainment and gift giving (cash or non-cash) to the team and/or business associates. 

It is important to remember that any benefit that a business provides to staff can be classed as a “fringe benefit” and therefore may be taxable.

Minor Benefits

There is an FBT exemption for minor benefits valued at less than $300.  E.g.  If as an employer, you host a party and also give a gift to everyone, the party and the gift are considered separate for FBT.  If each is less than $300, they are both generally FBT free.

Christmas Party

If your Christmas Party is held at your workplace, during work hours and attendees are staff only, it will most likely be exempt from FBT.  If it is held away from the workplace and associates (i.e. partners of employees) attend, the party won’t be exempt from FBT.  We note that the minor benefit exemption may still apply.

Additionally, providing your staff with transport between home and the party (i.e. taxi or uber) may attract FBT.

Cash Gifts

Cash gifts to employees are treated the same as salary and wages.  PAYG Withholding and Super Guarantee obligations apply as the Tax Office treat the cash gift as ordinary time earnings.

Gift Deductibility

Keep in mind that if a benefit is exempt from FBT, you typically cannot claim it as a tax deduction, nor can you claim GST credits.

Non-entertainment gifts (such as a Christmas hamper) where the taxable value of the fringe benefit is less than $300 per benefit provided to employees and their associates may be tax deductible.  Whereas Entertainment gifts (such as movie/theatre/sporting tickets) are not tax deductible.

We recommend you contact us to ensure you are not inadvertently caught by the FBT rules leading up to Christmas.

Lastly, Enjoy your Celebrations! Be Safe!