When rewarding employees with gifts or parties at Christmas, FBT may apply. Even if your organisation is exempt from income tax, providing food and drink could constitute a tax-exempt body entertainment fringe benefit.
There’s good news, though. Some FBT exemptions might apply in your circumstances.
I bet you want to know the best way to party and avoid such tax. We have listed some factors that can influence the amount of FBT payable.
- When the party will be held (i.e. for the minor and infrequent benefit exemption the cost of the benefit provided must be less than $300 per head and not provided regularly or frequently);
- Where the party will be held (i.e. for the property fringe benefit exemption to apply, the food and drink must be provided and consumed by current employees on the employer’s premises on a business day);
- For whom the party will be held (i.e. the tax consequences are different depending on whether the benefits are provided to employees, their associates or clients).
This brief overview gives a broad outline of the rules of FBT to Christmas time activities. We will further discuss each topic in the upcoming days. Stay tune!