As Christmas approaches, many businesses treat their employees for an end-of-year party or celebration. It’s a great chance to thank your team for their hard work and finish the year on a high note. But before you start booking venues and sending invitations, there’s one question we hear every year: can your Christmas party be tax deductible?

 

The answer depends on how you host it.

 

 

To make your Christmas party tax deductible, you need to keep it low-key and meet a few key conditions:

 

If you meet all the above conditions, your party should be fully tax deductible.

 

That said, it might not sound like the most exciting way to celebrate the year’s wins.

 

 

If you want something a bit more festive, you can host an off-site Christmas party for your team (and their partners). It won’t be tax deductible, but the good news is that you can avoid Fringe Benefits Tax (FBT) as long as the cost per head is under $300, including GST.

 

This means you can still enjoy a nice meal, a few drinks, and a proper celebration without worrying about extra tax, provided you keep it under that $300 limit.

 

 

 

No worries, that’s completely fine.

 

If your party costs more than $300 per head, the entertainment expense will simply be subject to FBT. Alternatively, you can choose to pay for the party personally using after-tax money, which keeps it outside the FBT rules altogether.

 

 

At the end of the day, whether you opt for a laid back party at the office or big shindig at a venue, the most important thing is to celebrate the people behind your business’s success. With a little planning, you can make sure you have a great time without any unwanted surprises during tax time.

 

Keep costs under $300 per head (including GST) to avoid FBT on off-site parties with partners.

 

Office parties with light refreshments on workdays can be fully tax deductible if you meet all the conditions.

 

Spending more is fine, you’ll just need to account for FBT or pay personally with after-tax dollars.

 

If you are still unsure how the above rules apply to your business or have something a little more unique, please reach out to our dedicated accounting team for help.