How to Claim Christmas Gifts as a Tax Deduction
Hey there, party planners and business owners gearing up for the festive season! If you're in charge of throwing a Christmas bash for your awesome team, you might be wondering about the nitty-gritty of tax-deductible shindigs and gifts. Don't worry, we've got your back – let's break it down for you.
Christmas Parties for the Team
So, here's the deal on the office holiday party. The taxman considers it 'entertainment,' and that can mean dealing with the notorious Fringe Benefits Tax (FBT). But fear not, there are exceptions. If your party happens on a regular workday at the workplace, and it's a staff-only affair, you're in the clear – no FBT.
Now, if you decide to take the party off-site, you can still avoid FBT as long as you keep the cost per head under $300. But remember, no tax deductions or GST credits for you in this scenario.
If the celebration gets a bit fancy and crosses the $300 threshold per head off-site, FBT comes knocking. The good news? The cost is now a legit tax deduction. Just keep in mind, FBT only applies to employees and their families, not your clients.
Gifts for your team
Gift-giving is a sweet tradition, and the taxman won't spoil the fun if you play your cards right. Keep those gifts for your stellar team under $300 (including GST), and you're in the clear from FBT.
But wait, there's more! The gifts shouldn't fall under the 'entertainment' umbrella. So, no restaurant meals, holiday stays, movie tickets, or concert passes. Instead, think hampers, gift baskets, store vouchers, skincare goodies, sealed bottles of cheer, or even a bouquet of flowers – all good to go.
And here's the cherry on top – if your gifts meet these criteria, not only are they FBT-free, but you can also snag a tax deduction and a GST input tax credit if you're in the GST club.
Quick note for the solo acts and partners running the show – sorry, you can't gift yourself a little something under this tax party. These benefits are exclusively for the hardworking employees.
Also, gifts given to former or current clients must be given with the intention of generating future income to be claimable. They cannot be given for a personal reason, such as because they are a friend.
So there you have it, the lowdown on making your Christmas party and gifts tax-friendly. Now go ahead, spread the holiday joy without worrying about any tax Grinches lurking around!
If you need help understanding the rules please, contact us.