The costs of food and drink associated with Christmas parties are exempt for FBT if they are provided on a working day on your business premises and consumed by current employees. The property benefit is only available for employees and not associates of the employees, or family and friends.
Note: Even though there’s no FBT on this, this is not a tax-deductible expense.
If you’ve got a training session at work, but not a Christmas party, and you are training them on something that your business does. And if you provide sandwiches on the lunch for them, then that would be a tax-deductible expense and not entertainment. It will cost you about a third less in profit before tax.
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Your friends or family will thank you later.