𝐓𝐚𝐱 𝐘𝐨𝐮𝐫 𝐁𝐮𝐬𝐢𝐧𝐞𝐬𝐬𝐞𝐬 𝐂𝐡𝐫𝐢𝐬𝐭𝐦𝐚𝐬 𝐏𝐚𝐫𝐭𝐲

Christmas parties are a great time to strengthen your connection with your staff, clients and suppliers. Unfortunately, there is no good news on the tax consequences of these events.

Christmas parties are treated as “Entertainment” and generally not tax deductible. For Christmas parties held on premises where only employees attend, all costs are not deductible and no GST credits are available. However, the costs are exempt from FBT.

Where Christmas parties are held off-premises; if the spend per employee is under $300 per head, it is exempt from FBT. As it is considered a minor benefit. However, it is not tax deductible and you can not claim GST credits. Above $300 per head, it is subject to FBT and you can now claim a tax deduction and the GST credits. This scenario does sound favourable, however the FBT applicable is approximately the same amount as the tax saved on the deduction and the GST credit you have claimed.

For all expenditure on your clients attending your Christmas Party is not tax deductible. Nor can you claim GST credits. However, it is exempt from FBT.

Christmas parties are more about strengthening relationships. Don’t focus on the tax consequences, just be aware of them.

What are you doing for your Christmas party?