Christmas parties and gifts on the December BAS

Business owners are now preparing their accounts for the December BAS. Can you include the GST and expenses for the staff Christmas party and gifts to your suppliers on the BAS?

Christmas parties

Can you claim the staff Christmas party as a business expense? Does fringe benefits tax apply? This depends on who attends and where the party is being held.

The provision of a Christmas party for an employee may be a minor benefit and exempt from FBT if the cost of the party is less than $300 per employee and certain conditions are met. This provision also applies to the employee’s associate (family member) or spouse.

The cost of providing a Christmas party is income tax deductible to the extent that it is subject to FBT. Therefore, any costs that are exempt from FBT cannot be claimed as an income tax deduction. GST credits can only be claimed to the extent that a cost is tax deductible. Therefore, if you cannot claim it as a deduction, you cannot claim the GST credits either. See ATO – Fringe Benefits Tax and Christmas Parties for more detail.

Christmas gifts for your employees

Are gifts to your employees claimable? Gifts may be classified as “entertainment” or “non-entertainment.”

The provision of a gift to an employee at Christmas time, such as a hamper, may be a minor benefit that is an exempt benefit where the value is less than $300. Where the gift is given at the Christmas party, each benefit can be considered separately.

For gifts such as wine, food, hampers, vouchers, etc., these are not considered to be entertainment.

  • If the gift is a minor benefit (i.e., less than $300 value), then the gift is tax deductible, and therefore GST is claimable for gifts to employees and their family members. No FBT applies to gifts of less than $300.
  • For gifts over $300, FBT may apply for employees and their family members and it is tax deductible.

Gifts such as a holiday, membership to a club, or tickets to a theatre, sporting or musical event are considered to be entertainment.

  • For minor benefits, under $300, the gift is not tax deductible and no FBT applies.
  • For employees given a gift over $300, the gift is tax deductible but it is also subject to FBT

Christmas gifts for your clients and suppliers

Are gifts to your clients and suppliers claimable? Gifts may be classified as “entertainment” or “non-entertainment”.

For gifts such as wine, food, hampers, vouchers, etc., these are not considered to be entertainment.

  • Non-entertainment gifts to clients or suppliers are deductible and GST is claimable, no FBT implications.

Gifts such as a holiday, membership to a club, or tickets to a theatre, sporting or musical event are considered to be entertainment.

  • For clients and suppliers, the entertainment gift is not tax deductible, no FBT applies and no GST is claimable.

See ATO – Fringe Benefits Tax and Entertainment for Small Business for more detail on what is classified as “entertainment”.

Visit Institute of Certified Bookkeepers for news, information and resources to assist bookkeepers and business owners.

Jo Voight, Institute of Certified Bookkeepers

The Institute of Certified Bookkeepers is one of Inside Small Business’s valued partners

 

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