While staff Christmas parties can attract fringe benefits tax (FBT) there may be exemptions available depending on the venue and cost per employee.

There are two main exemptions to FBT that could apply to Christmas parties – exempt property benefits and exempt minor benefits.

Exempt property benefits:

  • Christmas party costs include things like food and drinks served for employees as part of a Christmas party
  • the cost to provide these goods is exempt from FBT if they are provided on a working day on business premises and consumed by current employees of that business.

If the property benefits exemption doesn’t apply because the party is held at a restaurant or separate venue, the costs may be considered minor benefits and FBT exempt.

Exempt minor benefits:

  • cost per employee must be less than $300
  • the exemption also applies to associates of employees such as spouses and children, provided the cost is less than $300 per associate
  • gifts are also considered separately from the Christmas party so, provided the cost of a gift and the party are each less than $300, then both would be exempt from FBT.

Tax-exempt organisations have different provisions around providing entertainment to employees which means in most cases the costs of Christmas parties will attract FBT, though gifts may still be exempt as a minor benefit.

The Australia Tax Office has developed a fact sheet Fringe benefits tax and Christmas parties to help explain the FBT implications of your Christmas celebrations.