Christmas parties, gifts and tax - Startup Daily
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Christmas parties, gifts and tax

Disclosure: This article is not intended to replace in any way professional accounting advice

If your startup is having a Christmas party or you give Christmas gifts to staff, it’s important to be on top of the tax rules which apply. Generally speaking, when you provide gifts or entertainment to your staff, you need to pay an extra tax known as fringe benefits tax (FBT).

However, under certain circumstances (such as those surrounding Christmas parties and gifts) some exemptions can apply. The following goes through a few common scenarios. These scenarios are based on examples provided by the ATO.

Note that the following only applies if you are not a non-for-profit and do not use the meal entertainment 50-50 split for FBT. If you are unsure about whether these apply to you, have a chat to your accountant.

Example 1. Your startup holds a Christmas party in your office. The party is held on a normal working day and you provide food and alcohol. Only current staff attend.

There is no FBT payable.

Example 2.  Your startup holds a Christmas party in your office. The party is held on a normal working day and you provide food and alcohol. Current staff and their partners attend.

This one starts to get a little bit trickier and depends on the value of the food and alcohol benefit.

If the value of the benefit is less than $300 per person then there is no FBT payable in relation to the current staff’s portion. In relation to the partners’ portion, it is exempt from FBT but only if the minor benefit exemption criteria applies

If the value of the benefit is $300 or more per person then there is no FBT payable in relation to the current staff’s portion. However, FBT applies on the partners’ portion.

Example 3.  Your startup holds a Christmas party at a restaurant where food and alcohol is provided. The party is held on a normal working day. Current staff and their partners attend.

Again, this scenario depends on the value of the benefit.

If the value of the benefit is less than $300 per person then it is exempt from FBT for both the current staff and their partner, but only if the minor benefit exemption criteria applies

If the value of the benefit is $300 or more per person, then FBT applies in relation to both the current staff and their partner.

Example 4.  As a Christmas gift, I give each of my staff a $100 Myer voucher

As the voucher is less than $300, then it may be exempt from FBT but only if the minor benefit exemption criteria applies. If the value of the voucher was $300 or more, then FBT would be payable.

Giving is all part of Christmas, but to ensure you get the tax part right have a chat to your accountant first.





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