All I want for Christmas is FBT exemption.

If you’re not too sure whether your Christmas event or gift ideas are Fringe Benefit Tax (FBT) exempt, then take a look at some of the points made here to get a general idea. 

We do encourage you to get in touch with one of our knowledgeable team members here at Accounting Tax Solutions if you would like some bespoke advice, to ensure that you’re doing what you can to benefit from the available exemptions on offer.

You can hold a Christmas party for your staff and their associates (their partners) and the cost of the party can be exempt from FBT. This is possible should you be able to prove that the party is infrequent and irregular, meaning that you perhaps only have one other such event a year, if that, and that the cost per head is less than $300. 

These two criteria mean that your party meets the requirements of the minor benefit exemption, and under this exemption, a benefit will be exempt from FBT. 

The actual method of valuation:

This is only applicable when you use the actual method of valuation, which is conveniently the default method for valuing meal entertainment FBT. As such, no election is required to use this method. 

Unless an exemption is sourced, under the actual method for valuation you are required to pay FBT on all taxable meal entertainment for staff, their partners, but not to clients, contractors and suppliers. 

The 50/50 method of valuation: 

The less used 50/50 method of valuation is an alternative method where you are only expected to pay 50% of all taxable meal entertainment to everyone, including staff and their partners, and clients, contractors and suppliers. 

Gift giving: 

The minor benefits exemption again can be used for giving gifts that are valued at under $300, meaning that you can be exempt from paying FBT on many gifts. This threshold is separate from the $300 per head Christmas party threshold. 

Non-entertainment gifts such as hampers and alcohol are generally tax deductible and you can claim GST credits. Should the cost be under $300, the gift can also be FBT exempt. 

Entertainment gifts such as movie vouchers or flights are not tax deductible and you are unable to claim GST credits, but generally do not attract FBT if under $300. If over this threshold, then FBT does apply, but a tax deduction and GST credits can be claimed. 

For more information and support on how you can best navigate FBT exemptions and tax deductions on gift giving and Christmas entertainment for your staff this year, do get in touch with an Accounting Tax Solutions expert, today.