The differences between staff and their family and friends versus clients.  If you choose to invite clients to your Christmas party, the rules change. Regardless of the cost of the party, entertaining clients is not subject to FBT because FBT is for employees, their family, and friends. And the cost is not tax deductible. So you can spend more than $300/head on clients’ lunches and you’ll be exempt from FBT. And it’s not tax deductible and no GST credits claimable. Note: Even though there’s no FBT, this is NOT a tax deductible expense.   Christmas Party held on business premises An example is a small marketing firm decides to have a party on its business premises on a working day, the company provides food, beer and wine.  The implications for the employer in this situation would be as follows: Current employees only attend
  • There are no FBT implications as it is an exempt property benefit
Current employees and their associates attend at a cost of $180 per head
  • For employees – there are no FBT implications as it is an exempt property benefit, and the minor benefit exemption could also apply
  • For associates – there are no FBT implications as the minor benefit exemption applies
Current employees, their associates and some clients attend at a cost of $365 per head
  • For employees – there are no FBT implications as it is an exempt property benefit
  • For associates – a taxable fringe benefit will arise as the value is equal to or more than $300
  • For clients – there is no FBT payable and no income tax deduction
  Christmas Party held off business premises An example is another company that decides to hold its Christmas function at a restaurant on a working day before Christmas and provides meals, drinks and entertainment. The implications for the employer in this situation would be as follows: Current employees only attend at a cost of $195 per head
  • There are no FBT implications as the minor benefits exemption applies
Current employees and their associates attend at a cost of $180 per head
  • There are no FBT implications as the minor benefits exemption applies
Current employees, their associates and clients attend at a cost of $365 per head
  • For employees – a taxable fringe benefit will arise
  • For associates – a taxable fringe benefit will arise, nd
If you are holding a Christmas party for employees and their plus one or spouses, just make it under $300/head. Watch the webinar replay, ‘Christmas Parties & Tax – How wine is tax deductible’ at https://www.facebook.com/InspireCA/videos/1544736652557674

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