Christmas Parties and Fringe Benefits Tax

Kayla Hawker

With summer and Christmas just around the corner, you may be planning a Christmas Party for your employees. 

It is quite common for employers to provide Christmas parties and gifts at this time of the year. 

The Christmas Party is considered entertainment and in some cases be subject to Fringe Benefits Tax (FBT).

As an employer, the cost of food and drink associated with Christmas Parties are exempt from Fringe Benefits Tax, as long as they are provided on a working day on your business premises and consumed by current employees. If associates attend this party and the cost for them is under $300, this is also exempt from FBT as this falls under the minor benefit exemption rules.

If you were to host a Christmas Party offsite at a restaurant, certain FBT implications would arise. If the cost per head is under $300 then FBT doesn’t apply and falls under the minor benefit exemption rules. If the cost per head is over $300 then FBT will apply.

Concert tickets, movie vouchers and holidays are classified as ‘entertainment’ gifts by the ATO and are usually subject to Fringe Benefits Tax (FBT) and are not tax deductible. Hampers, vouchers, bottles of wine and other similar gifts are classified as ‘non-entertainment’ and are generally exempt from FBT. Although if the total cost per person is more than $300, each benefit should be considered separately under the minor benefits exemption.

If you wish to discuss more, please contact Green Taylor Partners.