How to Ensure Those Christmas Gifts and Events Don’t Cost You Too Much in Tax!

Two piggy banks adorned with Christmas outfits, one wearing a Santa hat, ready for the festive season. Contact our small business accountants to help you manage your finances and plan for the holidays.

As the year draws near, we believe it’s essential to emphasise the tax and Fringe Benefits Tax (FBT) aspects of the different Christmas benefits that might occur. By engaging a BAS agent and thoroughly understanding the regulations, you can guarantee that the expenses associated with gifts and events remain within the appropriate limits.

The treatment of this area is quite complex, but in general terms, the rules for a taxable employer are as follows:

  • Staff gifts such as a bottle of wine, gift basket or gift card are tax deductible and FBT exempt if the value is below $300 (inclusive of GST) per person.
  • Client Gifts that do not constitute entertainment represent a valid business expense and would be deductible for tax and GST purposes and not subject to FBT.
  • Christmas party and Dinner at a restaurant – this is considered meal entertainment and will not be tax deductible or be eligible for a GST claim to the employer. FBT may be applicable if the value of the meal entertainment for each person exceeds $300 (applicable to the combined cost of both the staff and the spouse/partner of the staff). A tax deduction and GST claim can be made when FBT is paid.
  • Taxi Travel to the party and home – FBT does not apply to taxi travel where the trip starts or ends at the workplace. The trip home from the restaurant, strictly speaking, is subjected to FBT, but you might be able to get an exemption by claiming the minor and infrequent benefit rule. GST can be claimed on these amounts.
  • Gifts for the boss – not deductible to employees.
  • The $300 minor and infrequent benefits rule – As referred to above, to be eligible for this exemption, a benefit must be minor (less than $300 GST inclusive) AND infrequent.

Here at S&W, we aim for another great Christmas function and are dressing up for the event as usual. Watch for the pictures in the January S & W Insight.

Don’t hesitate to contact us if you have any queries in relation to the above.

Kreston Stanley Williamson

*Correct as of November 2017

*Disclaimer – this article has been produced by Kreston Stanley Williamson as a service to its clients and associates. The information contained in the article is of general comment only and is not intended to be advice on any particular matter. Before acting on any areas in this article, you must seek advice about your circumstances. Liability is limited by a scheme approved under professional standards legislation.

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