Hopefully you have time before Christmas to let your hair down and celebrate a great year at your small business!
In the lead up to planning your work Christmas party here is some important information to consider.
You can’t file the staff Christmas party under ‘staff amenities’, in addition inviting your clients to your party will not remove your obligation to pay Fringe Benefits Tax (FBT). If you really want to splurge on your Christmas party to thank your staff for all their hard work, you can legitimately avoid paying Fringe Benefit Tax by hosting your party on your own premises during business hours.
If this is not for you, you can still celebrate at an after-hours offsite venue and avoid paying FBT if you keep the cost per employee for the evening (meals, drinks, entertainment and taxis) to under $300 (including GST).
Per the ATO website
Gifts provided to employees at a Christmas party
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 provided to an employee at a Christmas party that is also provided by the employer, the benefits are associated benefits, but each benefit needs to be considered separately to determine if they are less than $300 in value. If both the Christmas party and the gift are less than $300 in value and the other conditions of a minor benefit are met, they will both be exempt benefits.
Tax deductibility of a Christmas party
The cost of the work Christmas party is only tax deductible to the extent that it is subject to FBT. Hence , any costs that are exempt from FBT cannot be claimed as an income tax deduction.
The costs of entertaining clients are not subject to FBT and are not income tax deductible.
All the best for a fantastic Christmas and seasons greetings