Whilst it is that time of year where many employers like to host Christmas parties or provide staff with a small gift for their work during the year, we would like to take this opportunity to remind you that these events could attract Fringe Benefits Tax (FBT).
We will start with exempt property benefits, if the employer doesn’t use either the 50-50 split method or the 12-week register method for meal entertainment, the expenses relating to food and drink associated with the Christmas party will be exempt from FBT. This is applicable if the party is held on a working day and on the business premises and the food and drink is consumed by current employees.
The other exempt benefit is that of minor benefits. The same minor benefit rules apply to Christmas parties are no different to those which apply to other benefits throughout the year. When providing Christmas parties for your employees and their partners you don’t need to add these costs together. Rather, look at the cost as being provided to each person. Should the benefit being provided to each be less than $300, then it may be treated as a minor benefit and therefore exempt if certain conditions are met.
Often employers like to pass on gifts to staff at the Christmas party, these items should be considered separately when applying the minor benefits exemption from above. For example, those cost of gifts such as hampers, bottles of wine being presented at the function should be reviewed as a separate item when determining whether the minor benefits exemption applies.
Should you and/or your business be providing staff with a Christmas function and you have any questions in regards to the above, please contact our office today on 03 5821 4622.