Facing Old Tax Debts: Tips for Business Owners and Individuals

How to Maximise Your Tax Fringe Benefits at Christmas Time

by Ilkay Massink

As Christmas time rolls around, it is traditional to give gifts and to celebrate in style. As an employer, it is also traditional to throw a party for your staff, but you will always want to keep an eye on your expenditure if you do so, as otherwise these things can get out of control. You may understand that gifts, bonuses and parties may be just the cost of doing business at this time of year, but you may also want to capitalise on any tax breaks you can get to make it a little easier from a financial perspective. Don't expect the tax authority to get into the holiday spirit without some rules and restrictions, however, and make sure that you keep on the right side of the ATO when you are accounting.

How to Claim

Did you know that you can claim a fringe benefit tax exemption if you plan your Christmas shindig carefully? Generally speaking, the tax authority will allow you to claim costs that add up to around $300 per employee without having to pay any fringe benefit tax. You may also be able to claim the value of any food and drink supplied on your premises against this tax, but only for the actual employees who attend. If these employees bring any guests, then you may have to account for their costs separately, especially if it adds up to be more than $300 per head.

Extra Benefits

It's worth having a closer look at fringe benefits at this time of year because you may be able to claim an exemption if you give each member of staff a gift as well. In other words, this can be treated separately, but remember that there is a $300 ceiling in this case too, if you want to avoid any fringe benefits tax.

Careful with the Paperwork

Always be careful when you are accounting for this type of expenditure, especially when it comes to tax matters. If you are claiming an allowance against fringe benefits tax, make sure that you don't try and claim twice inadvertently. Some people may try to put party costs down against their income tax as well, which would be sure to raise eyebrows down at the ATO.

Delegating the Worry

To take away all of the worry and ensure that you can let your hair down at the same time as your staff, bring in a tax accountant to handle all of these calculations.