Is your xmas party tax deductable in Australia

Posted on Feb 12, 2014 | 0 comments

Christmas is one of the best festivities that unite people all over the world. It’s characterized with merry making and sending of gifts, and this can sometimes turn to be very costly ordeal. It even gets nastier when the parties to be held are huge especially organizational parties. Some countries will have such event taxed. The question that will run in most people’s minds is whether the party they hold in their organizations will be taxable or tax deductible. Is your xmas party tax deductable in Australia Christmas parties usually constitute entertainment benefits given to the employees in a bid to appreciate their hard work.

These are subject to fringe benefits tax (FBT) unless specifically exempt. The minor benefits exemption may also be applied. A minor help in such a situation would mean the provision of a benefit to an employee or their spouses on an irregular or infrequent basis. This should not in any way be that which is rewarded for a service delivered.It’s cost should also not be less than $300 per benefit which is inclusive of GST.

With the parties being taxable, many companies have opted to for non entertainment gifts. These should be gifts which cost less than $300. The gifts can cover employees of all levels including managers and even the subordinate staff. With these gifts, you can then be able to claim tax deductions and GST credit. The gifts that repeatedly fall in this category include skincare products, gift vouchers, wine, perfumes, beauty products and hampers.

The provision of entertainment gifts by the organization has different tax implications. Such gifts include theatre tickets, live play passes, passes to attend musicals, movies and sporting events among others. Where the cost accrued by the employee and their associate is less than $300 each inclusive of GST,FTB is not taxable. This means that no GST credit or tax deduction can be claimed. However, if the costs of each person is $300 or more, a tax deduction and GST credit will be claimed and FTB becomes payable.

This brings the importance of businesses maintaining separate accounts in their general ledgers for the purposes of recording the above transactions. This ensures that the correct income tax, FBT and GST treatment is applied at the end of the business year. Consequently, this will result to efficient tax program preparation and submission of the appropriate tax dues. This way the business can run smoothly without having lock heads with the tax institutions over tax submissions.

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