Gifts, bonuses, parties, and more: here’s a brief breakdown of what you can and can’t claim this festive season.
Employee gifts
Gifts that are not subject to the entertainment tax rules (vouchers, hampers, flowers) are fully deductible and exempt from Fringe Benefit Tax (FBT) if they cost less than $300 per employee per quarter, and the total for all staff stays below $22,500 a year.
However, gifts that do fall under the entertainment tax rules, like food hampers or wine, or taking your team to a show or event, are 50% deductible, and not liable for FBT.
Cash bonuses
Bonuses are classed as income, so PAYE and other payroll taxes apply. These “lump sum” payments are taxed at a flat rate based on your employee’s income bracket.
Client gifts
Food, drink, or entertainment gifts are 50% deductible. Other gifts (flowers, movie tickets, a book) are 100% deductible.
Workplace events
Christmas parties, client dinners, or team drinks are 50% deductible, while morning teas, office lunches, and charitable donations are fully deductible.
Remember: GST adjustments apply for entertainment expenses that are 50% deductible.
Not sure where your Christmas spending fits? Give us a call.
Disclaimer: This blog has been carefully prepared, but it has been written in general terms only. The blog should not be relied upon to provide specific information without also obtaining appropriate professional advice after detailed examination of your particular situation.
