At the risk of sounding like a Christmas grinch, I have outlined below the income taxation and Fringe Benefits Tax implication of holding a Christmas party at a venue such as a restaurant.
The following applies to businesses that are not tax-exempt organisations and do not use the 50/50 split method for meal entertainment.
The most common scenario is where your company decides to hold your Christmas function on a working day at a restaurant and provides meals, drinks, and entertainment.
The attendees of the Christmas party will fit into one of three categories;
- Associates of employees, or
In the case of employees and their associates (spouse etc.), if the GST inclusive cost per head is less than $300, then there will be no FBT payable, but the Christmas party expense will not be tax deductible you are unable to claim the GST credit.
Conversely, suppose the GST-inclusive cost for an employee and associate is greater than $300 per head, the Christmas party expense will be subject to Fringe Benefits Tax and tax-deductible, and you can claim the GST credits.
For clients or customers, there is no tax deduction, no Fringe Benefits Tax, and no GST credits.
Still confused, then feel free to contact Peter Quinn by submitting an enquiry or calling us on +61 2 9580 9166 to book an obligation-free appointment.
The information in this document does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it. It is important that your personal circumstances are taken into account before making any financial decision and it is recommended that you seek assistance from your financial adviser.