In some circumstances if a business provides and pays for Christmas parties for their employees and their associates, it may attract FBT.
There are some costs associated with Christmas parties for food and drinks that may be exempt from FBT. For example:
- Christmas functions provided on the business premises during a working day and consumed by the current employees (exempt business property benefits)
- Christmas functions provided and held off business premises if they are under the minor benefit threshold of $300 per employee and the associates and certain conditions are met (exempt minor benefits)
- Christmas gifts to employees provided by the business, if both the gift and the Christmas party are in total less than $300 in value, and certain conditions are met (exempt minor benefits)
When the Christmas party costs are exempt from FBT (exempt business property benefits and exempt minor benefits), they cannot be claimed as an income tax deduction by the business.
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