christmas deductions

Christmas is coming! What can you claim as a deduction?

Frequently asked questions below

The festive season is around the corner, and you may have already started planning for office celebrations, employee bonuses and client gifts.

Some Christmas festivities and gifts may incur FBT (Fringe Benefits Tax) which can end up costing more than you anticipated. Knowing what may be subject to FBT and/or tax deductible will help you make the most of the festive season and reward your employees and clients without your expenses getting out of control.

A note on entertainment

Food, drink or recreation provided to employees, or their associates is generally considered to be entertainment.  The FBT, income tax and GST consequences will depend on the type of food and drink provided, when and where it is provided.

Here are some frequently asked questions about Christmas deductions:

Are Christmas parties on-site deductible?

Generally, if the Christmas party is not subject to FBT, you cannot claim an income tax deduction for the cost of the party.

If a party is held on business premises FBT will not apply. As a result, an income tax deduction and GST claimed will NOT be allowed.

In instances where the party is held on a workday, with no alcohol and only light refreshments and finger foods, an income tax deduction and GST claim may be allowed.

Are Christmas parties off-site deductible?

If the party is off site FBT will not apply if the cost of the food and drink for each person is less than $300. However, you won’t be able to claim an income tax deduction or GST input credit.

If the cost per head is $300 or above, FBT is payable for employees and family, but not for clients.  In this instance, an income tax deduction is allowed, and the GST can be claimed.

Are Christmas gifts for employees deductible?

Gifts that are not considered entertainment are fully tax deductible with no FBT liability, as long as the value of the gift is under $300. These include but are not limited to hampers, wine, flowers, gift certificates.

Are Christmas gifts for clients deductible?

Yes. If the gift is not considered entertainment, then it is fully tax deductible and incurs no FBT. The $300 cost limit does not apply.

Is a Christmas cash bonus for employees deductible?

A cash bonus forms part of an employee’s salary and is therefore tax deductible to the employer.  The employee will be taxed on the bonus at normal tax rates. Cash bonuses are NOT subject to FBT.

Give us a bell – we’re here to help

We’re also planning our own Christmas events so we’re in the same boat, so to speak! Give us a bell on (03) 8790 7700 or email us at reception@portphillipgroup.com.au if you have any questions about tax deductions and FBT during the festive season. Our accountants are located in our Mt Eliza offices and we support local businesses across the Mornington Peninsula and throughout Melbourne.

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Let's

Get in

Touch

Office

Level 1, 73 Canadian Bay Rd
Mount Eliza
VIC 3930
View on map

Mailing

P.O Box 121
Mount Eliza
VIC 3930