It’s now less than four weeks until Christmas.
Many of you no doubt have planned, or begun to plan, for your work Christmas party.
Therefore, we thought we would take this opportunity to outline the tax implications of providing a work Christmas party.
Generally, non-cash benefits provided to employees by their employers attract Fringe Benefits Tax (FBT) at a rate of 46.5%.
The provision of a Christmas party to a employee may be a minor benefit and exempt from FBT, if the cost of the party is less than $300 per person (i.e. $600 for a couple).
The provision of a gift to an employee at Christmas time may be a minor benefit that is an exempt benefit where the value of the gift is less than $300.Where a Christmas gift is given to an employee at a Christmas party, the benefits are considered separately to determine if they are less than $300 in value. If the gift is less than $300 in value, no FBT applies.
That’s the good news!
The bad news is that when the minor benefit exemption is applied, no tax deduction can be claimed.