ATO, FBT and Christmas

We have all heard of Charles Dickens famous ‘Christmas Carol’ and none of us wish to appear to be Scrooge, but as business owners we have to think of the ATO, FBT and Christmas Parties.

·     Fringe benefits tax (FBT) and entertainment for small business (NAT 71590)

·     Fringe benefits tax (FBT) and entertainment for government (NAT 71589)

·     Fringe benefits tax (FBT) and entertainment for non-profit organisations (NAT 71586)

·     Fringe benefits tax and Christmas parties for tax-exempt bodies

The provision of a Christmas party to an employee may be a minor benefit and exempt if the cost of the party is less than $300 per employee & certain conditions are met.  This provision also applies to the employee’s associate. 

The provision of a gift to an employee at Christmas time, such as a hamper, may be a minor benefit that is an exempt benefit where the value is less than $300.  Where the Gift is given at the Christmas Party each benefit can be considered separately.

Christmas party held at Your Premises On a Work Day:

Only  Employees attend = NO FBT

Current Employees & spouses @ 180pp = NO FBT (minor exemption applies for spouse)

Employees, spouses & clients @ 365pp = Employee–NO FBT, Clients-NO FBT/no income tax deduction,   Associate-FBT applies as value more than $300pp

Christmas Party held at Other Premises:

Only  Employees attend @ 195pp = NO FBT(minor exemption applies)

Current Employees & spouses @ 195pp = NO FBT (minor exemption applies for both)

Employees, spouses & clients @ 365pp = Employee & Associate – FBT applies as value more than $300pp,  Clients-NO FBT/no income tax deduction