ATO+christmas+entertainment+FBT

Entertainment FBT

Entertainment FBT guide

https://www.ato.gov.au/General/Fringe-benefits-tax-(FBT)/In-detail/Fact-sheets/FBT-and-Christmas-parties/?page=2

FBT Christmas partexemption

FBT liability

If you are not a tax-exempt organisation and do not use the 50-50 split method for meal entertainment, the following explanations may help you determine whether there are FBT implications arising from a Christmas party. >  ====Exempt property benefits ==== The costs (such as food and drink) associated with Christmas parties are exempt from FBT if they are provided on a working day on your business premises and consumed by current employees//.// A taxable fringe benefit will arise in respect of an associate of an employee who attends the party if not otherwise exempt under the minor benefits exemption. >  ====Exempt benefits - minor benefits ==== > You should note the change in our view to the application of the minor benefits exemption to Christmas parties and gifts. The minor benefits threshold of less than $300 applies to each benefit provided, not to the total value of all associated benefits. > End of attention The provision of a Christmas party to an employee may be a minor benefit and exempt if the cost of the party is less than $300 per employee and certain conditions are met. The benefit provided to an associate of the employee may also be a minor benefit and exempt if the cost of the party for each associate of an employee is less than $300. For the FBT year beginning 1 April 2006 and prior years, the minor benefits threshold was less than $100 rather than less than $300. >  ====Gifts provided to employees at a Christmas party ==== The provision of a gift to an employee at Christmas time may be a minor benefit that is an exempt benefit where the value of the gift is less than $300. > Where a Christmas gift is provided to an employee at a Christmas party that is also provided by the employer, the benefits are associated benefits, but each benefit needs to be considered separately to determine if they are less than $300 in value. If both the Christmas party and the gift are less than $300 in value and the other conditions of a minor benefit are met, they will both be exempt benefits. >  ====Tax deductibility of a Christmas party ==== The cost of providing a Christmas party is income tax deductible only to the extent that it is subject to FBT. Therefore, any costs that are exempt from FBT (that is, exempt minor benefits and exempt property benefits) cannot be claimed as an income tax deduction. > <span style="background-color: rgba(255,255,255,0);">The costs of entertaining clients are not subject to FBT and are not income tax deductible. > <span style="background-color: rgba(255,255,255,0);"> ====<span style="background-color: rgba(255,255,255,0);">Christmas party held on the business premises ==== <span style="background-color: rgba(255,255,255,0);">A Christmas party provided to current employees on your business premises or worksite on a working day may be an exempt benefit. The cost of associates attending the Christmas party is not exempt, unless it is a minor benefit. > > |||| <span style="background-color: rgba(255,255,255,0);">Example > > <span style="background-color: rgba(255,255,255,0);">A small manufacturing company decides to have a party on its business premises on a working day before Christmas. The company provides food, beer and wine. > <span style="background-color: rgba(255,255,255,0);">The implications for the employer in this situation would be as follows. || > || <span style="background-color: rgba(255,255,255,0);">If… || <span style="background-color: rgba(255,255,255,0);">Then… || > || <span style="background-color: rgba(255,255,255,0);">current employees only attend || <span style="background-color: rgba(255,255,255,0);">there are no FBT implications as it is an exempt property benefit. || > || <span style="background-color: rgba(255,255,255,0);">current employees and their associates attend at a cost of $180 per head || > || <span style="background-color: rgba(255,255,255,0);">current employees, their associates and some clients attend at a cost of $365 per head || > <span style="background-color: rgba(255,255,255,0);">* Where the benefits are indicated as qualifying for the minor benefits exemption, it is on the basis that the necessary conditions have been satisfied. > <span style="background-color: rgba(255,255,255,0);"> ====<span style="background-color: rgba(255,255,255,0);">Christmas party held off business premises ==== <span style="background-color: rgba(255,255,255,0);">The costs associated with Christmas parties held off your business premises (for example, a restaurant) will give rise to a taxable fringe benefit for employees and their associates unless the benefits are exempt minor benefits. > > |||| <span style="background-color: rgba(255,255,255,0);">Example > > <span style="background-color: rgba(255,255,255,0);">Another company decides to hold its Christmas function at a restaurant on a working day before Christmas and provides meals, drinks and entertainment. > <span style="background-color: rgba(255,255,255,0);">The implications for the employer in this situation would be as follows. || > || <span style="background-color: rgba(255,255,255,0);">If… || <span style="background-color: rgba(255,255,255,0);">Then… || > || <span style="background-color: rgba(255,255,255,0);">current employees only attend at a cost of $195 per head || <span style="background-color: rgba(255,255,255,0);">there are no FBT implications as the minor benefits exemption applies.* || > || <span style="background-color: rgba(255,255,255,0);">current employees and their associates attend at a cost of $180 per head || <span style="background-color: rgba(255,255,255,0);">there are no FBT implications as the minor benefits exemption applies.* || > || <span style="background-color: rgba(255,255,255,0);">current employees, their associates and clients attend at a cost of $365 per head || > <span style="background-color: rgba(255,255,255,0);">* Where the benefits are indicated as qualifying for the minor benefits exemption, it is on the basis that the necessary conditions have been satisfied.
 * ===Implications for taxpaying body===
 * <span style="background-color: rgba(255,255,255,0);">for employees - there are no FBT implications as it is an exempt property benefit, and the minor benefit exemption could also apply*
 * <span style="background-color: rgba(255,255,255,0);">for associates - there are no FBT implications as the minor benefit exemption applies.*
 * <span style="background-color: rgba(255,255,255,0);">for employees - there are no FBT implications as it is an exempt property benefit
 * <span style="background-color: rgba(255,255,255,0);">for associates - a taxable fringe benefit will arise as the value is equal to or more than $300
 * <span style="background-color: rgba(255,255,255,0);">for clients - there is no FBT payable and no income tax deduction.
 * <span style="background-color: rgba(255,255,255,0);">for employees - a taxable fringe benefit will arise
 * <span style="background-color: rgba(255,255,255,0);">for associates - a taxable fringe benefit will arise, and
 * <span style="background-color: rgba(255,255,255,0);">for clients - there is no FBT payable and the cost of providing the entertainment is not income tax deductible.
 * <span style="background-color: rgba(255,255,255,0);">Last modified: 21 May 2013QC 17787
 * <span style="background-color: rgba(255,255,255,0);">Last modified: 21 May 2013QC 17787

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