We all know the Grinch loves to ruin Christmas and so you want to be extra careful when organising the office Christmas Party or giving staff a Christmas gift that you don't actually get hit with the Christmas Grinch of taxes - the Fringe Benefits Tax.
The Fringe Benefit Tax is currently
set at a whopping 47%.
The Fringe Benefits Tax is designed to ensure there is no benefit in the ongoing rewarding of employees via gifts rather than wages or salary. Examples of where the Fringe Benefits Tax might apply could be a company car, or a discounted loan, or free tickets to a concert. Thankfully the Australian Tax Office provides an exemption for gifts and parties that are less than $300 in value per person and even more thankfully the gift and the party are considered separately.
It is also important to consider the type of gift you are giving your employees because you can claim GST credits on non-entertainment gifts but you cannot claim GST credits on entertainment gifts. Non-entertainment gifts could be a Christmas hamper or a bottle of wine or gift vouchers. Entertainment gifts could be sporting, movie or theatre tickets, flights or accommodation for a holiday or membership to a club.
If you are considering organising something more extravagant for a Christmas Party this year it might be advisable to talk to your accountant to ensure the Grinch doesn't ruin your Christmas.
Caroline at Tax Go is always available to offer friendly advice on this or any other tax matters you may have.