As the Christmas / Year-End party season nears, a reminder about Fringe Benefit Tax (FBT) liability, noting the heightened risks this time of year traditionally brings.
“After the year that’s been, some bosses may wish to treat their employees to a bigger than usual Christmas party or gift as a way of saying thank you. Without wanting to sound like the Christmas grinch, it’s worth reminding your business clients that their generosity could create a tax liability,” Elinor Kasapidis, Senior Manager Tax Policy at CPA Australia, said.
“Parties and gifts are considered a benefit of employees that are not part of their salary, therefore, above certain thresholds they are captured by the FBT rules. The FBT implications of Christmas parties is a recurring problem and each year some bosses get burned. Factors such as where the food and drinks are served, who the guests are, and how much is spent will determine if there are FBT implications.”
Kasapidis explained businesses should follow 3 key rules to avoid incurring FBT:
- Stay below the minor benefit threshold of $300 (FBT exempt benefits)
- Hold celebrations on business premises (exempt property benefits)
- Only invite current employees or keep the costs for associates under $300
To read the full article, please visit FBT Christmas.