Festive Season and FBT.
With the festive season well and truly on its way, many of you may be in the midst of organising gifts and Christmas parties. Unfortunately, the provision of these benefits may give rise to Fringe Benefits Tax (“FBT”). However, there are some simple things to consider when planning your event to maximise tax benefits:
Keep the cost below $300 (i.e. no more than $299.99) per head for staff and associates in order to potentially access the minor & infrequent exemption
Providing different types of benefits e.g. a lunch and a gift are treated as separate benefits and therefore if separately they total less than $300 they may both be exempt
Generally, any costs that are exempt from FBT cannot be claimed as a tax deduction (with the exception of gifts to employees that are less than $300)
Choose the right type of gifts
Minor Benefit Exemption
The minor benefit exemption provides an exemption from FBT for most benefits of 'less than $300' that are provided to employees and their associates (e.g., family) on an infrequent and irregular basis.
The ATO accepts that different benefits provided at, or about, the same time (such as a Christmas party and a gift) are not added together when applying this $300 threshold.
Christmas Party held on business premises
If you’re contemplating having your Christmas Function on premise, the implications are different compared to holding it off premise:
Christmas Party held off business premises
Should FBT apply, it is important to note that there are different methods that can be used to calculate the liability. This is something we can assess and discuss with you when preparing your FBT Return.
Gifts for employees and clients are dealt with slightly differently when it comes to FBT.
Clients Gifts
Where gifts are non-entertainment, e.g. a hamper, flowers, non-entertainment based gift vouchers they are not subject to FBT and they are tax deductible, no matter the cost.
However, if you bought a gift that was considered entertainment e.g. tickets to the theatre, a tax deduction would not be available and no FBT applies.
Employee Gifts
Both entertainment and non-entertainment gifts are subject to FBT for employees except where they fall under the minor & infrequent exemption.
Non-entertainment gifts that are less than $300, are eligible for a tax deduction and the GST can be claimed.
If entertainment based and less than $300, FBT wouldn’t be payable but you can’t claim a tax deduction or GST credit.
If you have any queries in relation to Fringe Benefits Tax generally, please get in touch with us.