Maximising Christmas Cheer and Minimising Tax Stress for Your Business
Christmas parties and client gifts are all about spreading cheer, celebrating your team's hard work, and showing your clients some well-deserved appreciation. But before you go all-in on parties and presents, let’s make sure you’re across the tax stuff. Here’s the lowdown to keep things merry and stress-free.
Celebrate With a Purpose
Holiday celebrations aren’t just an excuse to pop the champagne—they’re about recognising your team’s hustle and your clients’ loyalty. Whether it’s a casual gathering or an all-out bash, the intention matters just as much as the budget.
The Tax Rules for Christmas Parties
Planning a work party? Here’s what you need to know tax-wise:
If the party costs under $300 per person, it’s not tax-deductible, but typically exempt from Fringe Benefits Tax (FBT). So, no tax break, but no extra tax headache either.
If it’s over $300 per person be ready to pay FBT, but these expenses are tax-deductible. A bit of give and take!
FBT Exemptions You Should Have on Your Radar
Sometimes, you can dodge FBT altogether:
If you’re providing food and drinks on your business premises during work hours and it’s enjoyed by your current employees, it might be exempt.
Hosting a shindig that costs less than $300 per head for employees (plus their guest) often gets you out of FBT territory too.
Gifts for Your Team – What’s In and What’s Out
When it comes to gifting, here’s the deal:
Tax-Deductible Goodies: Hampers, flowers, and store gift cards make the cut.
Non-Tax-Deductible (But Still Fun): Entertainment gifts like movie tickets/gift cards, or concert passes won’t get you a tax break.
The take home is, client gifts can’t be “entertainment” if you want them to be tax deductible.
Client Gifts and the GST Twist
Client gifts? No FBT, unless they double as employees or their family members. One thing to note though—if your gift isn’t tax-deductible, you can’t claim back the GST. Yep, tax can be a tricky little elf.
Keep Your Celebrations Stress-Free
Holidays can get hectic—and expensive. But with a little know-how and a solid game plan, you can enjoy the festivities without worrying about tax landmines. Want to keep things merry without the accounting mayhem? Reach out to an accountant who can help you keep your celebrations both joyful and smart.
