A very FBT free Christmas party: reduce your tax time costs

SYDNEY, 13 December 2021: Fringe Benefits Tax (FBT) may not be the first thing that comes to mind when planning a Christmas party, but this notoriously complicated tax is worth consideration during the silly season – both for your tax bill and your accountant’s peace of mind.

So how do you avoid the sting of FBT, both to the company coffers and your accountant’s work hours, this Christmas party season?

“The FBT that applies to your office Christmas party depends on factors like who is attending, where the event is held and how much is spent per head. If you’re looking to minimise FBT, opt for an event held in the office during a working day, for employees only. That type of party would generally be exempt from FBT, regardless of the cost, so it’s a good option if you’re spending $300 or more per head. You can usually also pay for employees travel to and from the office for a Christmas party without FBT applying,” Scott Treatt, CTA, General Manager, Tax Policy and Advocacy at The Tax Institute says.

“When you start including plus ones, heading outside the office and looking at travel costs, things become much more complex and you’re less and less likely to benefit from exemptions. If your employees are travelling from home straight to an offsite party, travel costs are subject to FBT too.”

FBT for Christmas parties & entertainment

	Less than $300			$300 or more
Location	On-site	Off-site		On-site	Off-site
Employee	Exempt from FBT: Minor benefit Exempt property/expense benefit No tax deduction or GST input tax credit available	Exempt from FBT: Minor benefit Not an exempt property/expense benefit No tax deduction or GST input tax credit available		Exempt from FBT: Not a minor benefit Exempt property/expense benefit No tax deduction or GST input tax credit available	Subject to FBT: Not a minor benefit Not an exempt property/expense benefit Tax deductible and GST input tax credit available
Plus ones	Exempt from FBT: Minor benefit Not an exempt property/expense benefit No tax deduction or GST input tax credit available			Subject to FBT: Not a minor benefit Not an exempt property/expense benefit Tax deductible and GST input tax credit available
Clients	Not subject to FBT No tax deduction or GST input tax credit available

 

FBT may be less than 1% of tax collections, but it represents 10% of tax compliance costs according to some surveys.

So to make sure your office accountant gets to enjoy the festivities as well, without the added work of untangling FBT requirements, be sure to get them involved in event planning throughout the year.

“The important thing is to keep your records in order and make sure you’re keeping up with FBT requirements throughout the year. That way, you don’t have a big mess on your hands come tax time. It’s a complex tax and should be simplified, but in the meantime, good planning goes a long way.”

 

ENDS

For more information, please contact:

Kelly Emmerton – Content and Media Manager, The Tax Institute

kellyemmerton@taxinstitute.com.au  

02 8223 0029              0410108681

 

 

See page 88 of the Case for Change report for more information and statistics on FBT.