How to Claim Christmas Gifts as a Tax Deduction

It’s that time of year again — the tinsel’s out, the Mariah Carey playlist is back, and you’re gearing up to shout your team a Christmas bash. But before you start swiping the business card like an elf on espresso, let’s talk about what the taxman actually lets you claim.

The Work Christmas Party

Here’s the straight-up truth: for most small-business owners, the Christmas party is not tax-deductible. Why? Because the tax office calls it “entertainment” — and they don’t mean that in a fun way.

If your party costs less than $300 per head, it’s considered a minor benefit… and that means no tax deduction and no FBT.

Go over $300 per head off-site, and suddenly it is tax-deductible — but you get slapped with Fringe Benefits Tax, which usually wipes out the benefit. In other words: don’t try to outsmart the ATO. They’ve been around longer than Santa.

Gifts for Your Team

Now here’s where Christmas gets a little cheerier. If you want to spoil your team with gifts, keep them under $300 each (including GST) and make sure they’re not entertainment, and you’re golden.

That means:
🎁 Hampers
🎁 Gift baskets
🎁 Store vouchers or gift cards
🎁 Skincare packs
🎁 Sealed bottles of something festive
🎁 Flowers

All of these are tax-deductible with no FBT.

What doesn’t make the cut? Restaurant meals, holidays, movie tickets, concerts — basically anything that involves someone having fun outside the office. The ATO isn’t big on that.

A Quick Reality Check

If you’re a sole trader or in a partnership, you can’t give yourself a tax-deductible Christmas pressie. (Nice try though.) These rules apply to employees only.

And if you’re giving gifts to clients, make sure there’s a business purpose — like strengthening a commercial relationship. Giving your mate a bottle of Shiraz “just because” won’t fly with the tax office.

Wrapping It Up

So there you have it: the Barefoot breakdown of keeping your Christmas spending tax-friendly.

Throw a party your team will love, give gifts that won’t spook the taxman, and head into the holidays knowing you’ve kept more money where it belongs — working for you.