Is the work Christmas party subject to Fringe Benefits Tax?

Applied-Education-Blogs

Christmas parties are a great way to thank staff and clients for their time and support over the year.

If you are hosting a function for your clients that require your staff to attend, remind your staff that this is a work commitment, albeit a relaxed event, and to behave accordingly. The employer is also required to pay the working hours. When employers and staff understand their roles, these event can be a great way to enhance client relationships and understand each other’s business.

If you are hosting an event for staff, you need to be aware of your responsibilities in relation to staff’s health and safety. Decide and explain the expectations for the event and remember as host, this is a wonderful time to celebrate your staff’s achievements and promote a positive work environment.

Sadly, there can be tax for parties!

Fringe benefits tax (FBT)

While there is no separate tax for staff Christmas parties, it could fall under Fringe Benefits Tax. FBT is paid by employers when providing certain benefits to employees and their families such as entertainment and recreation.

Example of entertainment:
• meals and drinks including staff social functions such as Christmas parties and farewells
• sporting or theatrical events, sightseeing tours and holidays (i.e. theatre tickets, round of golf, a harbour cruise)

Exemptions

If the party is held on a work day at the business premises, generally the event is exempt from FBT. If it is a “minor benefit” where the total cost per employee is under $300, then it is exempt.

Remember to plan your event with the understanding of FBT rules and hopefully they will be successful and fun events for everyone, include the tax man!

Leave a Comment

Your email address will not be published.

Scroll to Top