Minimise FBT at your Year-End Party

Did you have a great time with family & friends over the holiday season?

Don’t want frustrating form-filling for FBT to ruin the holiday?

We all like to party, but none of us want to pay Fringe Benefits Tax (FBT) if we don’t have to. 

So if you, as an employer, had a Christmas party or planning on having an Easter or mid year party, how can you enjoy the fun, and avoid FBT? The answer depends on a few things, but here are our top tips: 

Where are you planning to hold the party?

a) Outside your business premises? In that case: 

The best thing you can do is keep the cost of the party to less than $300 per employee. Also, keep the cost of any related gift to less than $300 per employee. 

Eg.  Gifts can range from hampers, gift cards and chocolate as long as the value is $300 or under.

If any spouses or other family members of employees also attend, the above $300 limit applies to them too. 

b) On your business premises, on a working day? Then be aware of this: 

If you plan to have just employees attend, then the cost of the party can be more than $300 and still be exempt from FBT.

For example if current employees, their associates and some clients attend at a cost of $365 per head then:

• For employees – there are no FBT implications as it is an exempt property benefit

• For associates –  a taxable fringe benefit will arise as the value is equal to or more than $300

• For clients – there is no FBT payable and no income tax deduction

However, if you also plan to have spouses or other family members attend, then it’s best to keep the cost of the party to less than $300 per person. Otherwise, you would need to pay FBT on the cost of the party that relates to the spouses/family members. 

Any related gifts such as hampers, gift cards and chocolates needs to be less than $300 per employee.

Do you plan to have clients or suppliers attend?

This part is easy! FBT doesn’t apply to any party or gift costs that relate to clients or suppliers. 

Remember, no matter where you hold the party, if you have spouses or family members attend, the easiest thing to do to avoid FBT is to keep the cost of any gift or party to less than $300 per person. 

Luckily for employees, in general none of the above issues have any impact on their tax position. They can just enjoy the festivities! 

If you would like more information on how you can avoid FBT at your work parties, please let us know by scheduling an appointment.

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