Christmas is fast approaching, so as you plan your staff Christmas party it is important to keep in mind the Fringe Benefits Tax (FBT) rules and how they may affect your business.
Staff Christmas parties are categorised as Meal Entertainment fringe benefits and unless it is exempt, the employer will be obligated to pay tax at 49% on the taxable value of benefit.
Will my Christmas party be liable for FBT?
Generally the work Christmas party provided to its employees and associates will be subject to FBT unless:
- Costs such as food and drinks are provided on a working day, on your business premises, and consumed by your current employees,
- The cost per benefit is less than $300 per employee or associate.
If you are able to satisfy either of the above conditions, then there will be no FBT consequences.
Are employee Christmas gifts liable for FBT?
Meal entertainment is defined as entertainment by way of food, drink or recreation provided to an employee or associate. Examples of these include:
- Theatre tickets, movie tickets, sporting events
Gifts that are not deemed to be meal entertainment include:
- Christmas hampers, perfume, flowers, gift vouchers or a bottle of wine.
Gifts provided to an employee or associate are liable for FBT unless it is less than $300.
Please contact our office on 03 9629 1433 and we will assist in preparing the necessary compliance work to satisfy any FBT obligations.