Staff gifts, events and their deductibility
Jarrod Kemp • January 22, 2025
At this time of year businesses may have spent money towards employee gifts and/or events, this can lead to two potential tax issue arising from these expenditures. These issues are income tax deductibility and fringe benefits tax (FBT).
There are some important definitions to consider related to staff gifts or events, the main definition being whether the gift or event is considered as entertainment. Per the Income Tax Assessment Act (ITAA) 1997, Section 32.10 –
(1) Entertainment means:
(a) entertainment by way of food, drink or recreation; or
- business lunches
- social functions.
These are some examples of what entertainment is not:
- meals on business travel overnight
- theatre attendance by a critic
- a restaurant meal of a food writer.
So based on the ITAA definition, if your gift or event is classified as entertainment, it is not deductible towards your business and any GST credits are also not claimable. The next issue that arises from gifts and events is possible FBT consequences.
If the expense towards employee gifts or events is a minor benefit (below $300 per person), generally FBT will not be relevant. If you are unaware of FBT or how this may affect your business regarding employee gifts or events, feel free to contact our office regarding this, as this can be a very complex area of legislation.
Some examples of the above are as follows:
Gifting an employee a voucher at the end of the year of $100, this expense would be exempt from FBT as it is considered a minor benefit (provided it is not a regular occurrence) and would be deductible to the business as it is not considered to be entertainment. The GST credits will also be claimable as it is a deductible expense (where applicable).
Providing food and drink to employees for a Christmas party (providing the average cost per head is less than $300) would not be deductible to the business as this is entertainment, FBT is most likely not relevant due to this being a minor and infrequent benefit to the employees.
You offer a golf day to employees, associates and clients, held on a weekend and the cost averages out to $320 per person, this is entertainment as it is a social function, therefore no tax deduction is available and as it is no longer considered a minor benefit, FBT will apply to the costs associated with employee participation.
As you can see, there are many factors that can affect whether staff gifts or events are considered entertainment, deductible or subject to FBT, please contact our office so we discuss this with you if you are unsure.
The post Staff gifts, events and their deductibility appeared first on Green Taylor Partners.
More GTP Articles
It is Federal Budget night on May 12 and even though you may not be an excited accountant or tax agent counting down the days, if you are an investor, it is likely there will be changes announced which will impact you. The change which is likely to be unveiled will be the Albanese Government’s approach to capital gains tax, targeting mainly share and property investors, but will also impact business owners who sell business assets. It is likely the Albanese Government will re-introduce an inflation indexation model for calculating capital gains tax. This proposed change has gained more traction in the media over the last few weeks. Currently, individual taxpayers and trust beneficiaries are able to reduce their capital gains tax on the sale of any capital investment by 50 per cent, providing this investment has been owned for at least 12 months. Please note – superannuation funds receive only a one-third discount. For an individual, this means half the gain is tax free, the remaining half of the gain is taxed at the taxpayer’s marginal tax rate. This discount system on capital gains has been in place since 1999. Capital gains tax (CGT) was introduced in 1985 and is applied to realised gains and losses on assets acquired after 19 September 1985. If an asset was purchased prior to the introduction of CGT, then it is exempt from CGT when sold. From 1985 to 1989 an indexation system was used where inflation factors were applied to the original cost, so only the “real/after inflation” gain was taxed. At this stage there has been no indication whether the changes, if introduced, would be grandfathered, to spare existing investors from any initial pain.
Keeping a car logbook is an important part of managing your vehicle expenses, especially if you’re looking to maximise your tax deductions and GST claims or reduce your FBT liability. The Australian Taxation Office requires you to keep a logbook for a minimum continuous period of 12 weeks to establish your business-use percentage. Each trip should include the date, start and end times, kilometres travelled, and the purpose of the journey. Your logbook needs to reflect your typical vehicle use and can generally be relied on for up to five years, as long as your usage doesn’t significantly change. You’ll also need to record your vehicle’s odometer readings at the start and end of each FBT year and financial year. For many small business owners and tradies, keeping a car logbook is necessary but often pushed aside during busy workdays. Manually recording trips can be time-consuming, and it’s easy to forget details after the fact. There are now several apps available that reduce the manual effort of keeping a logbook. One we often recommend, which complies with ATO requirements, is Driversnote. Driversnote is designed to simplify the process by using GPS tracking to automatically record trips. This helps ensure journeys are logged consistently without relying on manual entry. Trips can be easily categorised as business or personal, and the app generates reports that align with ATO logbook requirements. This can make it easier to stay organised and provide accurate information at tax time. The app also stores data securely and keeps a history of trips, which can be useful if you ever need to review your records. For those who regularly use their vehicle for work, tools like Driversnote offer a practical way to maintain a logbook without the usual hassle—helping keep everything accurate, organised, and in one place. If you’re unsure whether a logbook is right for your situation, contact us— one of our team can help you work out the best way to track your vehicle use and ensure your records are accurate for FBT and tax time.
The Federal Government has once again extended the $20,000 instant asset write-off , providing continued support for small businesses looking to invest and grow. Under the latest legislation, eligible businesses can access the $20,000 threshold for assets first used or installed ready for use between 1 July 2025 and 30 June 2026 . This extension means businesses can continue to immediately deduct the full cost of qualifying assets, rather than depreciating them over several years. How the write-off works The instant asset write-off allows small businesses with an aggregated turnover of less than $10 million to claim an immediate deduction for assets costing less than $20,000 (excluding GST). The threshold applies on a per-asset basis , meaning multiple assets can be written off, provided each individual item is under the limit. Eligible assets can include tools, equipment, vehicles (subject to other limits), and office technology. Both new and second-hand assets may qualify, provided they are used for a business purpose. A critical point often missed is timing. It’s not enough to purchase an asset before 30 June— it must be installed and ready for use by that date to qualify for the deduction. What happens to assets that are above $20,000? If an asset exceeds the $20,000 threshold, it cannot be immediately written off in full. Instead, it is allocated to the small business general depreciation pool and depreciated over time. Under current rules, assets in this pool are typically depreciated at 15% in the first year and 30% in each subsequent year (on a diminishing value basis). This means the tax deduction is spread across multiple years rather than claimed upfront. Why the extension matters This measure continues to deliver meaningful cash flow benefits. By bringing forward deductions, businesses can reduce taxable income in the current year, freeing up funds for reinvestment or day-to-day operations. However, the extension is temporary. From 1 July 2026 , the threshold may revert back to just $1,000 unless further legislation is passed. This ongoing uncertainty makes forward planning essential so talk to your accountant today to plan ahead.
Fringe Benefits Tax (FBT) is a separate tax from GST and income tax that applies when a business provides benefits to employees or other associates. With the FBT year ending on 31 March , now is the time to review any benefits provided over the past 12 months to ensure you remain compliant. Understanding Fringe Benefits? A fringe benefit is any non-cash benefit, reimbursement, or expense paid by a business that is provided instead of, or in addition to, salary and wages. A simple way to think about it is if the business is paying for a personal expense or private use of a business asset, it may be a fringe benefit. Who FBT Applies To? FBT may apply where benefits are provided to individuals who are employees or are otherwise associated with the business. This includes: Employees Company directors Associates of employees or directors (including family members) Trust beneficiaries who are involved in, or connected to, the business For example, where a director is provided with the use of a company vehicle for private purposes, an FBT liability may arise irrespective of whether the director receives remuneration in the form wages. For businesses operating through a company or trust structure, it’s important to remember that the business is a separate legal entity . This means personal use of business assets is treated similarly to providing a benefit to an employee. Important Exception Sole traders or partnership owners using their own business assets personally do not trigger FBT. However, FBT can still apply if these businesses provide benefits to employees. Common FBT Areas for businesses While FBT can apply in many situations, the most common areas we see are: 1. Car Fringe Benefits If an employee, director or associate uses a company car for private purposes, FBT applies. Even parking the car at home overnight counts as personal use. TIP - Use the logbook method to track business-related travel and reduce FBT liability. 2. Entertainment Benefits Providing employees, directors or associates with free meals, drinks, and staff events (such as Christmas parties) may be subject to FBT. TIP - Limit to under $300 per person for minor benefits exemption, as this threshold deems the value insignificant. 3. Expense Payment Benefits If the business pays for personal costs on behalf of an employee or associate, this may be considered a fringe benefit. TIP - It’s important to distinguish between personal and work-related expenses. If the expense is work-related, the employer may be able to classify it as a business expense instead. 4. Housing and Accommodation Benefits Providing employees with rent-free housing or at a reduced rent can trigger FBT. TIP - Employers may be eligible for exemptions if housing is necessary for employees in remote areas or living away from their usual place of residence to carry out their duties. What you should to do If you believe you may be providing a fringe benefit to an employee, director, or associate, we recommend the following: Ensure accurate records and supporting documentation are maintained Complete the annual FBT questionnaire provided by Green Taylor Partners Provide all relevant information to enable us to assess whether FBT applies and assist you in meeting your compliance obligations
Romance scams are often seen as a personal problem. In reality, they can expose businesses to fraud, data loss, and serious financial risk. Romance Scams: Not Just a Personal Issue Romance scams cost individuals and businesses millions of dollars every year. While the emotional damage is significant, the commercial consequences are often overlooked. Criminals use social media, dating platforms, messaging apps, and even professional networks to build trust with their targets. These scams don’t discriminate — they affect people of all ages, industries, and seniority levels. Once a relationship is established, the risk shifts from personal to professional. Employees may be pressured to move money, share confidential information, or bypass internal controls. In some cases, business bank accounts, supplier details, or payroll systems are put directly at risk. For business leaders, protecting people is part of protecting the business. Common Red Flags to Watch For 1. It seems too good to be true Scammers often use attractive or highly polished photos (sometimes stolen or AI-generated ) and move on quickly to declarations of affection or commitment. 2. They avoid face-to-face contact Excuses may include constant travel, working overseas, military service, or sudden emergencies that prevent meeting in person. 3. A sense of urgency around money Requests for funds often involve an “emergency” — medical bills, business problems, or travel issues. Once money is transferred, it is usually very difficult to recover. 4. Requests to move to encrypted messaging apps Scammers often push conversations away from mainstream platforms to avoid detection or account bans. 5. Investment opportunities appear Victims may be encouraged to invest in cryptocurrency or other schemes. These scams can run for months or even years to build trust and appear legitimate. 6. Being asked to handle payments for someone else Requests to receive and forward money can unknowingly involve individuals and businesses in criminal activity. 7. Changes in behaviour People being targeted may become secretive, irritable, or make unexplained financial decisions. This can be particularly concerning in finance, payroll, or senior roles. Simple Steps to Stay Safe If you or your team connect with someone online, a few practical checks can significantly reduce risk. 1. Search their photos online Use a reverse image search to see if profile photos appear elsewhere. Be cautious of images that look overly perfect — some may be AI-generated. 2. Be alert during video calls Watch for poor-quality video, faces that remain hidden, or visual glitches such as odd blinking, distorted backgrounds, or lips that don’t sync with speech. 3. Search their name with the word “scam” This simple step can reveal reports on scam monitoring or consumer warning sites. 4. Act quickly if money has been sent Contact your bank’s fraud team immediately, report the incident to the relevant platform, notify the police, and lodge a report with your national cybercrime agency. Why This Matters for Leaders Romance scams thrive on trust, the same trust businesses rely on every day. Creating a culture where employees feel safe to speak up without embarrassment or fear can prevent a personal situation from becoming a business crisis.
