Christmas Functions & Gifts – Tax Deductibility
You may be able to claim tax deductions for your Christmas function or work gifts if they’re for people who are part of running your business, such as employees, clients, suppliers or prospective clients and suppliers.
Generally, you can claim 50% of your Christmas party expenses as an expense in your GST and income tax returns. Your expenses can include things like venue hire, food, drink and entertainment.
If you subsidise the cost of your Christmas function you can claim 50% of the amount you contribute as an expense.
You can generally claim 100% of the cost of gifts, such as food, wine, or event tickets, as an expense. If you give your employees a gift or voucher (excluding cash gifts), then you may need to pay FBT (fringe benefit tax) on this.
No FBT will be payable if the gift or voucher is less than $300 per employee per quarter and the total for all employees is less than $22,500 per annum. For example, if you buy each of your 10 employees a $200 fuel voucher as a Christmas gift and that is the only gift you have given them during the year, then you will be able to claim 100% of the expense.
No FBT will be payable as it falls below the threshold of $300 per employee per quarter and the total is less than $22,500 per annum.
If have any questions regarding the tax treatment of Christmas functions or gifts please give us a call to discuss.
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