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By Tina Zawila
As Christmas approaches, many small business owners are planning end-of-year celebrations and employee gifts. It’s a great way to thank your team—but it’s also a time when businesses can unintentionally trigger Fringe Benefits Tax (FBT). Here’s what you need to know to stay compliant while still spreading some festive cheer.
FBT applies when employers provide benefits to employees (or their associates) in place of salary or wages. At Christmas, this often relates to entertainment such as parties, meals, drinks, and gifts. Importantly, entertainment expenses are not tax-deductible, and you generally cannot claim back the GST credits associated with them. That means even if FBT doesn’t apply, you might still miss out on deductions you’d usually expect for business expenses.
The good news is that many common Christmas perks can fall under the minor benefits exemption—meaning no FBT is payable. To qualify, the benefit must be both under $300 (GST-inclusive) per person and considered infrequent or irregular.
For example:
- Christmas party held off-site: Exempt from FBT for employees and their families if the cost per head is under $300.
- Gifts such as hampers, wine, vouchers or event tickets: These may also be exempt if each individual gift is under $300 and not provided regularly.
The $300 threshold applies separately to each benefit. If you hold a party and give a gift, each must be assessed independently. Also, benefits provided to clients are generally not subject to FBT (though still not deductible if they are entertainment).
The safest approach is to plan intentionally: keep costs below the minor benefits threshold where possible, understand that entertainment is not deductible, and document your calculations.
If you’re unsure whether your event or gift will attract FBT, seek professional advice early—before the celebrations begin. A little planning can save FBT hangover in the new year.
The professional team at UHY Haines Norton CQ Pty Ltd are here to help you understand all of your taxation obligations, especially the ones that may be a surprise this Christmas! Call us today on 4972 1300.
