What Tax Can You Claim on Work Christmas Events?

What tax can you claim on work Christmas events?

As we enter the holiday season, business owners are beginning to think of the best ways to thank and celebrate their employees for all of their hard work during the year. From an evening out dining to quirky team-bonding activities, you may wonder just how much of a tax deduction you can claim on these Christmas expenses.

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Entertainment expenditure

Christmas party expenses are regarded as entertainment expenditure. This means that if the cost per employee is less than $300 (GST inclusive), then all of your expenses will be fully tax-deductible. 

However, if the amount you spend per employee exceeds $300 (GST inclusive), then your entertainment expenses will fall within the rule of fringe benefit tax (FBT) which means FBT would be payable at 49% of the gross value of entertainment expenses paid.

Event vs gift

If you’re trying to make a decision on how to treat your employees this Christmas, a large event that brings costs above $300 per employee isn’t necessarily the best choice. Opting for non-entertainment gifts (which are still regarded as entertainment expenditure) can allow you to be more personable. 

Gifts such as vouchers, event tickets, or hampers give you the chance to get creative and put more thought into what you’re giving the person. However regardless of your choice in Christmas gift being an event or non-entertainment gift, if the value exceeds $300 per employee then your expenses will still become subject to FBT.

Spending on clients and suppliers

Contrary to employees, when it comes to entertainment expenditure on clients and suppliers there is no $300 mark per person. All entertainment expenses in relation to clients and suppliers are exempt from FBT rules if it's open to general public as well, and you can claim tax deduction on the entire value of expenditure so long as the value is not considered excessive.

The season of giving 

At this time of year, alongside celebrating your hard-working employees, it’s also a good time to contribute to charity as the Christmas season can be difficult for many. If you are thinking about making a contribution to charity it is helpful to know that all expenses on food, gifts or entertainment that are donated will be 100% tax-deductible. 

There are many ways to enjoy the festive season, be it a Christmas office party, making a positive impact by contributing to charity, or spending time with your loved ones. However you choose to celebrate, the team at Osbornes wishes you a safe and Merry Christmas.