With Christmas fast approaching and most Australian businesses starting to think about the season of giving, you may be planning a Christmas party for your hard working employees to thank them for their hard work during the year.
We would like to share with you a little knowledge of the tax deductions you’ll be able to claim, that can make this year’s party extra sweet. 🍭🧁
Holding a Christmas party on business premises during work hours is the most tax effective option for businesses. The cost of a light meal and drink will be tax deductible to the employer with no FBT liability incurred. The meal can be several courses and include a variety of foods, but must exclude alcohol. In addition, the food must not be so lavish, that it turns into 'entertainment'.
In reality though, most Christmas parties are not held on business premises, but at an external venue such as a restaurant. In this case, if the cost of food, drinks and alcohol is kept to less than $300 per employee, no FBT is payable by employers. Unfortunately you will not be able to claim a tax deduction or GST credit for the cost.
If the cost per head is $300 or more, the party cost will be subject to FBT but both the party cost and GST can be claimed.