By Ashleigh McMillan
The ATO has produced a fact sheet on the tax implications for employers of Christmas parties for staff.
If a business is not a tax-exempt organisation and is not using the 50-50 split method for meal entertainment, there may be Fringe Benefits Tax (FBT) repercussions arising from an optometric practice’s celebrations.
The Australian Taxation Office fact sheet explains what distinguishes a party that hosts only current employees versus a party that hosts clients and employees, as well as the implications of Christmas parties held onsite versus those held off premises.
The website includes several models that illustrate the implications and benefits of various scenarios. For example, a company that holds a function prior to Christmas where food, drinks and entertainment are provided may not incur FBT implications if the cost is less than $195 per person and only current employees attend. This scenario would be subject to the minor benefits exemption rule instead.
Christmas gifts for employees also have implications for FBT. For example, a gift or hamper that meets the conditions of the minor benefits exemption rule and costs less than $300 will not attract any FBT.
For a fuller explanation of the tax implications of Christmas parties, visit the ATO’s Fringe benefits tax and Christmas parties fact sheet.