Spend big on your Christmas party: FBT exemption up

As you plan your office Christmas party this year, keep in mind that you can triple your spend per employee without incurring fringe benefits tax this year.

Employers using the actual method of FBT accounting can now spend up to $300 on each staff member (and their partner, if you like) at the Christmas party this year, before incurring a FBT tax liability.

The minor fringe benefits threshold went up from $100 to $299 as of 1 April this year, says Deloitte global employer services partner Frank Klasic.

Klasic says the exemption will only apply to businesses that use the actual method of FBT accounting rather than the “50:50” method. The latter is popular with companies that don’t keep proper records of spending on entertainment – whether it be for staff or clients – and just claim 50%.

Companies that use the actual method, which is more effective for companies that are careful to spend their entertainment budget mainly on clients, will get the benefit.

The exemption is available for other entertainment spending on staff under $300 – in addition to Christmas – but Klavic warns it must be minor and infrequent to attract the exemption. And watch out how much you spend on the Christmas gift as well, otherwise your spending might nudge over the $300 limit.

And for bosses really trying to save their pennies, there is also the option of a Christmas party on the premises. Klavic say that if you hold your Christmas party at the workplace and provide food and drinks, you will be FBT exempt, regardless of what you spend.


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