Fringe Benefits Tax, GST and Christmas Parties.

It’s coming up to the best time of the year - festive season. We all get a chance to let down our hair after a long and stressful year at the work Christmas party. However, the ATO loves to crash the party and point out all the non-cash benefits that employees receive in the festivities. Whether you’re having a BBQ lunch onsite, going on a fishing trip, a day at the races or going out for dinner, we have the go to guide for how FBT will apply (and what exemptions to use).

Gifting

• Christmas presents to employees (property benefits) are generally exempt from FBT unless you’re feeling very generous (spending over $300 per employee), however they are not tax deductible and you cannot claim GST on them.

• Christmas presents to clients are different – if they are an item such as a hamper or slab of beer you can claim them as a tax deduction and claim GST, however if the gift is tickets to an event it is no longer tax deductible and you cannot claim GST as it becomes entertainment which the ATO has stricter rules on.

Partying

• Both onsite and venue based events (meal entertainment benefit) have a similar treatment – the minor benefit exemption is again your best friend here as long as the benefit is less than $300 per employee you won’t have to worry about FBT, however this means there’s no GST or tax claim.

• Additional attendees can get caught in the trap of FBT as well – partners of employees are treated the same as the employees themselves so can apply the minor benefit exemption. Clients, contractors and suppliers that get the lucky invite are not included in FBT, however the cost is considered entertainment and is not deductible and you cannot claim GST.

Big Spend

• If you are spending over $300 per person and can’t use the minor benefit exemption, then you will need to prepare an FBT return for the year ending 31 March 2026. When a benefit is being reported in an FBT return and no exemption applies, then you can claim the tax deduction and GST credit on the expense.

Please get in touch with your adviser if you have any further questions and are concerned about how your festivities fit in with all the fringe benefits rules.