Christmas is a great time to acknowledge, appreciate and reward your employees and other associates by celebrating and giving gifts, you may encounter many different circumstances when having these events for your staff may attract Fringe Benefits Tax (FBT).
The cost of providing a Christmas party is income tax deductible only to the extent that it is subject to FBT, Therefore, any costs that are exempt from FBT cannot be claimed as an income tax deduction.
How to keep it free from FBT:
- Benefits provided less than $300 are exempt from FBT so keep them under $300.
- Providing benefits that your employees would be entitled to, claim as an income tax deduction.
- Vouchers and gift cards can be given to employees below $300.
- Replacing fringe benefits with Christmas bonuses and processing it through payroll.
There is no FBT if provided benefits are related to emergency accommodation, food, transport, or other assistance to an employee if:
- the benefit is emergency assistance to provide immediate relief, and
- the employee is, or is at risk of being, adversely affected by COVID-19.
In the context of COVID-19, the FBT emergency assistance exemption applies if you provide emergency accommodation, food, transport, or other assistance to an affected employee.
Source: https://www.ato.gov.au/
