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Make the Most out of the Christmas Party and Keep it Tax-Free

The Christmas season is fast approaching and with this comes our festive moods and celebration preparations. As the holidays are getting near, companies are also preparing for their respective festive season parties.

It is important to celebrate and enjoy the festivities but it is also important to keep in mind a few pointers in order to have a merry and tax-free Christmas. It is best to celebrate the company’s Christmas party at the workplace and during the work week, but if the management decides to celebrate away from the office, then the cost of each benefit should not exceed $300 for each employee since this amount is the minor benefit threshold mandated by the ATO.

Some of the benefits that the company can give away are: the party, gifts and taxis – provided that the destination points are strictly only from the workplace to the party venue and vice versa. If the organization decides to give away cash bonuses instead, then it is best to understand that these cash incentives will be treated as regular salary and wages thus are liable for tax and super obligations.

The most important nugget of information that needs to be remembered is that if the benefit is exempted from FBT, then the company cannot claim the expenses as an income tax deduction.

For more information, please feel free to contact us.

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