Around this time of year, many businesses start thinking about the staff Christmas party and come June, they wonder if they can claim it as a tax deduction. So here’s the scoop on the tax implications of having a Christmas party this year.
The short answer is, the cost of holding a Christmas party for your clients or staff is not a tax deduction and it could incur Fringe Benefits Tax (FBT).
To avoid paying FBT, the staff Christmas party needs to meet certain criteria such as:
- The party is held at your business premises on a work day.
- All catering and drinks can be provided by the business but must cost less than $300 per head.
- If the on-site catering costs are more than $300 per head or past employees are invited, FBT could be incurred.
- If the party is held off-site (like in a restaurant) and only current staff attend, the total cost must be less than $300 per head otherwise FBT is incurred. However, you may be able to claim a tax deduction and claim GST input tax credits (but speak with us first).
- Client Christmas parties are not tax deductible and don’t incur FBT.
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When it comes to your financial well-being, we believe in having real conversations and providing accurate, easy to understand taxation and financial advice. If you are looking for an accountant who will partner with you, contact the office on 02 4721 7444 or email@example.com.