It is almost that time of year and we thought we should again highlight the tax and Fringe Benefits Tax (FBT) side of the various Christmas benefits that may arise. With proper planning, and knowledge of the rules, you can ensure that the gifts and events don’t cost you more than they should.
The treatment of this area is quite complex but in general terms the rules for a taxable employer are as follows.
- Staff gifts such as a bottle of wine, gift basket or gift card are tax deductible and FBT exempt if the value is below $300 (inclusive of GST) per person .
- Client Gifts that do not constitute entertainment represent a valid business expense and would be deductible for tax and GST purposes and not subject to FBT.
- Christmas party and Dinner at a restaurant – this is considered as meal entertainment and will not be tax deductible or be eligible for a GST claim to the employer. FBT may be applicable if the value of the meal entertainment for each person exceeds $300 (applicable to the combined cost of both the staff and the spouse/partner of the staff). A tax deduction and GST claim can be made to the extent that FBT is paid.
- Taxi Travel to the party and home – FBT is not applicable to taxi travel where the trip either starts or ends at the workplace. The trip home from the restaurant strictly speaking is subjected to FBT, but you might be able to get an exemption by claiming the minor and infrequent benefit rule. GST can be claimed on these amounts.
- Gifts for the boss – not deductible to employees.
- The $300 minor and infrequent benefits rule – As referred to above to be eligible for this exemption a benefit must be minor (less than $300 GST inclusive) AND infrequent.
Here at S&W we are aiming for another great Christmas function and are dressing up for the event as we normally do. Watch for the pictures in the January S & W Insight.
Don’t hesitate to contact us if you have any queries in relation to the above.