With summer well and truly upon us, many business owners will be spreading the Christmas cheer with staff and clients. With this in mind, it is important to consider the possible tax implications of providing these benefits.

Generally the cost associated with having a Christmas party is not deductible. The only exception is where Fringe Benefits Tax (FBT) is paid on the expense.

Are your gifts entertainment? That is the question you need to answer to ascertain if your gifts are tax deductible. Gifts not considered to be entertainment are often; hampers, wine, vouchers (not for entertainment), perfume, flowers etc.
1. Where these gifts are provided to employees at a cost less than $300, no FBT is payable and a deduction is allowed for income tax purposes.
2. Where the cost is greater than $300, FBT is payable and a tax deduction is allowed.
3. Where these types of gifts are provided to clients, no FBT is payable and a tax deduction is allowed.

Gifts often deemed to be entertainment include; tickets to attend performances, sporting events, holiday tickets etc.
1. Where these types of gifts are provided to employees at a cost less than $300, no FBT is payable and no tax deduction is allowed.
2. Where the cost is greater than $300, FBT is payable and a tax deduction is allowed.
3. Where these types of gifts are provided to clients, no FBT is payable and no tax deduction is allowed.

To seek any clarifications on the deductibility of your Christmas expenses, please contact the staff at CNS Partners.