Christmas Parties & Gifts 2019
Year-end (and other) staff parties
Editor: With the well earned December/January holiday season on the way, many employers will be planning to reward staff with a celebratory party or event. However, there are important issues to consider, including the possible FBT and income tax implications of providing ‘entertainment’ (including Christmas parties) to staff and clients.
FBT and ‘entertainment’
Under the FBT Act, employers must choose how they calculate their FBT meal entertainment liability, and most use either the ‘actual method’ or the ’50/50 method’, rather than the ’12-week method’.
Using the actual method
Under the actual method, entertainment costs are normally split up between employees (and their family) and non-employees (e.g., clients).
Such expenditure on employees is deductible and liable to FBT. Expenditure on non-employees is not liable to FBT and not tax deductible.
Continue Reading: Christmas_Parties_and_FBT_update_2019.pdf