As an employer, you’re no doubt thinking about holding a Christmas party to reward your staff for their hard work during the year. However, before you break out the bubbly, you should be aware of the tax implications.
The cost of holding a staff Christmas party is regarded as ‘entertainment’ expenditure and therefore it is not tax deductible – unless the cost per person is more than $300, but then you would have to pay Fringe Benefit Tax (FBT).
A tax effective option for saying thank you to your staff is to give them ‘non-entertainment’ gifts that cost less than $300 per person, as this will be fully tax deductible with no FBT payable.
Popular non-entertainment gift options include bottles of wine, gift vouchers and Christmas food hampers.
Of course it’s hard to beat the camaraderie of a Christmas party, but we just want to make sure you have all the tax facts!
Enjoy the upcoming season!