With the silly season in full swing, don’t lose sight of your FBT liabilities as you share a drink or two with your employees at your end of year celebrations. The ATO wants you to enjoy yourself but be warned, rules still do apply!
The ATO has stated that the FBT rules for Christmas entertainment are no different to the general FBT rules. Under the “minor benefits” umbrella, there is an allowance for a $300 limit for incidental benefits, which are not provided regularly, to be FBT free. This means that entertainment at Christmas, up to the value of $300 for each employee, is generally exempt from FBT. It is also usually the case if an employee’s spouse attends the function as well.
As an added bonus, the Santa inspired tweak states that the $300 limit applies to each benefit provided and not a total value of associated benefits. So if you are feeling generous and give each employee a gift as well, the gift and the party are treated separately for any FBT calculations.
Hosting a Christmas party on your business premises on a working day with only employees attending means that the food and drinks provided will be FBT free. If any associates ie spouses or partners attend then the cost will still be FBT free if it is less than $300 for each person. Where a Christmas party is held at say a restaurant, then the $300 limit applies to both employees and associates.
When an employee is provided with a taxi to and from the function, it is the venue that will determine if the taxi fare is exempt from FBT. If the taxi is from home to the venue and back home again, then the fare is to be included in the cost per head limit, with the total cost to be under the $300 minor benefit limit.
If a taxi is provided from home to a function held at the workplace and then back home again afterwards, the taxi fare is exempt from FBT.
Are you wondering if you can claim a tax deduction for a Christmas party that you host? Well, if it is not subject to FBT, then you cannot claim a tax deduction. The same applies in relation to your ability to claim GST.