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Fringe benefits tax (FBT) on Christmas parties – a gift to the ATO

The end-of-year office drinks is a festive tradition in Australia, but the annual work Christmas party could cost companies in unexpected fringe benefits tax, according to Nexia Court & Co.

FBT Christmas PartyNexia’s Tax Partner, Sean Urquhart, says companies are now being penalised for rewarding their staff at the end of the year, and for many employees across the country, the elaborate work Christmas party could soon become a thing of the past.

“The unfortunate fact is that many Christmas parties will be scaled down or cancelled due to these tax rulings,” says Sean.

“Companies are already watching their costs, and the thought of additional tax could cause many companies to cancel the end-of-year do.

“There are certain ways companies can avoid fringe benefits tax, for example  by having their parties on the work premises, during work hours, with only current staff members, and keeping the total cost to less than $300 a head, but where’s the joy in that?

“Most company Christmas parties are traditionally held at night time, off the premises, and with partners invited. All of these factors lead to fringe benefits tax.

“If the Christmas party is held off the premises, for example in a restaurant or at a bar, fringe benefits will apply. If staff members bring guests to the party, fringe benefits will also apply.

“If the company rewards their staff with gifts, such as a bottle of wine or a Christmas hamper, that will also be included in the total cost of your party and can quickly push the cost per head above $300, which will also attract fringe benefits tax.”

Sean says companies concerned about the impact of fringe benefits tax on their work Christmas party should speak to their accountant before finalising plans.

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David Olsen

David Olsen

An undercover economist and a not so undercover geek. Politics, business and psychology nerd and anti-bandwagon jumper. Can be found on Twitter: <a href="http://www.twitter.com/DDsD">David Olsen - DDsD</a>

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