By Dec 20, 2019 External CFO News Tax Advice & Planning

It's the festive season, and it's around this time that clients often ask us if Christmas Parties for staff are tax-deductible.

The short answer is that Christmas Parties are generally classified as Entertainment and are therefore not available as a tax deduction.

Additionally, GST cannot be claimed on non-deductible items.

Christmas parties and other forms of entertainment can only be tax-deductible to the extent that Fringe Benefits Tax is paid on those expenses.

FBT will apply to your Christmas Party unless it can be classified as FBT Exempt.

This may occur under the Minor Benefits Rule.

Minor benefits rule:

  • The benefit is minor (less than $300 per staff member), irregular & infrequent.
  • $300 per head rule - Each benefit needs to be considered separately to determine if they are less than $300 in value.

Or under the Exempt Property Benefit

  • If the Party is held on the work premises, then it is exempt from FBT for employees in attendance.

We hope this was helpful - Merry Christmas to all.

References:

Keeping Co. is a team of experts; Cloud Accountants, Business Advisors, Finance Specialists working together to provide a complete solution for the Australian Small to Medium Business owner.

The material and contents provided in this publication are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained. We are here to help, contact us today.

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