The Christmas season is well and truly upon us and with it comes a spirit of generosity; perhaps a few gifts, hopefully a party or two, and maybe, if it’s been a good year, a bonus.
When it comes to parties, gifts and bonuses from businesses, the ATO has a few guidelines, and it’s wise to know what taxes or exemptions will apply.
Christmas Bonus
If an employer chooses to pay their employees a Christmas bonus, these bonuses will need to go through payroll and be taxed accordingly. Superannuation also applies, and if you’re a large employer it will also count towards payroll tax.
Christmas Parties
If you’re having a Christmas party and it’s held on your business premises, on a workday, and with no alcohol, then the party would be tax deductible – but hey that’s not a party!
If the party is held at a restaurant/pub for employees and their partners, and costs less than $300 including GST per person then the benefit is FBT exempt, but unable to be claimed as a tax deduction and GST credits are not claimable either.
Christmas Gifts
Gifts can broadly be separated into two categories:
–entertainment such as tickets to a concert,
–non-entertainment such as a Christmas hamper, a Christmas ham or a gift card (which isn’t redeemable for cash).
Gifts are FBT exempt if their value is less $300 and they are not provided on a frequent or regular basis. Entertainment gifts are not tax deductible and no GST credits are claimable, while non-entertainment gifts are tax deductible and GST credits are claimable.
Each minor fringe benefit is assessed individually, so it’s possible to provide your employees with both a Christmas party and a Christmas gift provided the Christmas party is less than $300 per head, and the gift is less than $300 in value.
The above is all a general outline of the rules so please reach out to us in order to clarify your specific circumstances if you are unsure.
Have a fabulous Christmas and we wish you all the best for 2024.
– David Gorman
Posted 20.12.2023
This article is compiled as a helpful guide for your private information and is subject to copyright. We suggest that you do not act solely on the basis of material contained in this article because items are of general nature only and may be liable to misinterpretation in particular circumstances. We recommend that our advice be sought before acting on any of these crucial areas.
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