As the end of the year approaches, many businesses prepare to celebrate team achievements with staff parties, events and thoughtful gifts. While these gestures help boost morale and recognise hard work, it’s important for employers to understand these festive benefits attract Fringe Benefits Tax (FBT).
Before you finalise your holiday plans, here’s a simple guide to help you stay compliant and avoid any unexpected tax consequences.
Whether FBT applies will depend on several factors:
Understanding these details can help you structure your celebration in a tax-friendly way.
The good news is that many common end-of-year benefits can be exempt from FBT in specific situations.
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Benefit Provided
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FBT Exemption Criteria
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Key Consideration
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Food and Drink (Workplace)
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Consumed on your business premises (a rented corporate box or function venue is not considered your business premises) and on a working day
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This often covers typical workplace lunches or afternoon teas for only current employees
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Food and Drink (Off-site)
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Costs (including GST) less than $300 per person and qualifies as a minor benefit
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Typically applies to off-site holiday dinners (employees and their associates) to each benefit. The $300 threshold applies separately.
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Gifts (Infrequent)
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Costs (including GST) less than $300 per person, provided infrequently, and qualifies as a minor benefit.
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Non-entertainment gifts (e.g., a hamper, voucher) are often covered by this rule. The $300 threshold applies separately.
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Recreational activities
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Costs (including GST) less than $300 per person and qualifies as a minor benefit
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Activities like theatre tickets or a movie ticket fall under this. The $300 threshold applies separately.
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Benefits for Clients
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Benefits provided only to business clients are not subject to FBT
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If clients attend your staff party, you only need to consider FBT on the portion of the expenditure related to your employees and their associates. The costs related to clients are outside the FBT system.
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To see how these rules apply in real scenarios, check the ATO’s common entertainment fringe benefit examples.
No matter how simple or small your event may seem, keeping the right records is essential. Proper documentation helps you:
Make sure to keep invoices, guest lists (employees and associates and clients), and cost breakdowns for every event or gift.
For more detailed guidance, refer to the ATO’s resource on Record keeping for FBT, or consult a registered tax agent for tailored advice.
As your accounting advisor, we’re here to help you understand your obligations and plan your celebrations in a tax-effective way.
If you’re preparing staff events or gifts this festive season, contact us for a quick, we can help you assess whether FBT applies and ensure you stay compliant.
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