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December 14, 2020

FBT and Christmas Gifts

Christmas is just around the corner and many business owners are preparing celebrations and gifts for employees to celebrate the year end. But how does this affect your tax liability and is Fringe Benefits Tax (FBT) payable?

Holding a Christmas party may or may not be tax deductible depending on the following circumstances:

  • If the costs associated with the party such as food and drink are provided on a working day on your premises and consumed by current employees, they will be considered ‘exempt property benefits’ and will be exempt from FBT.
  • If the party is held externally and costs less than $300 GST inclusive per employee, it may be considered a ‘minor benefit’ and be exempt from FBT and not tax deductible.
  • If the party is held externally and costs more than $300 GST inclusive per employee, it will be subject to FBT and tax deductible.

Providing gifts to employees are treated similarly depending if they are considered entertainment or non-entertainment gifts:

Entertainment gifts (concert tickets, sporting events, movie tickets, theatre tickets, airline tickets etc.)

  • More than $300: Subject to FBT and is tax deductible
  • Less than $300: Generally considered a ‘minor benefit’ and is exempt from FBT and not tax deductible

Non- entertainment gifts (pen sets, flowers, wine, spirits, Christmas hampers etc.)

  • More than $300: Subject to FBT and is tax deductible
  • Less than $300: Considered a ‘minor benefit’ and is exempt from FBT but is tax deductible

Please contact our office on 9387 5637 if you have any questions in relation to FBT.

 

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