Christmas is coming and it’s the season for entertainment and gift-giving! As an employer, you may be thinking of presents and treats you can give your staff and clients and whether those presents and treats can be claimed for tax purposes. Here is a brief outline of the general rules for Christmas entertainment and gifts.
1. 50% Entertainment Deduction
Parties with Food and Drink Christmas parties for your employees, in-work celebrations, ‘shouts’ at the local pub any kind of general entertainment with food and drink you can claim 50% of your party expenses - claimable in your GST or Income Tax returns. The 50% entertainment rule also applies to your clients and suppliers who you may wish to celebrate a good year with. If you shout them a ticket at a corporate box where they can eat and drink – that’s entertainment; so is accommodation in a holiday home or a journey in a corporate yacht. Basically, where food and drink is provided or consumed on your premises, at a local restaurant or hotel the 50% rule applies.
2. 100% Gift and Promotions Deduction
Christmas presents for your staff and clients as long as it’s not over the general employee exemption figure and the maximum employer exemption figure for Fringe Benefit Tax. The current exemption figures are $300 per employee per quarter and $22,500 maximum employer exemption per annum. If you exceed the exemptions you will need to pay Fringe Benefit Tax on the total value of the benefits.
So that’s the rules in brief, you can watch the video below which has explained the basic rule of deductible expenses, but if you are still unsure or looking at other benefits for your staff throughout the year then give us a call and we'll help make sure you are claiming the right deductions.
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