Thinking of hosting a Christmas Party to thank your amazing team?

Here’s what to keep in mind so your festive shindig doesn’t lead to a tax sting:

• Fringe Benefits Tax (FBT) Rules: Before you uncork the bubbly, remember that the Australian Tax Office (ATO) has rules about “entertainment expenses.” If your party costs less than $300 per person, you may be able to dodge FBT under the minor benefits exemption. Just keep track of all costs, from the prawn platters to the DJ.
• Location Matters: If you’re looking to keep things tax-friendly, a low-key celebration in the office (think fairy lights, a good playlist, and festive snacks) is usually safer than splurging on a luxury venue.
• Plus-Ones and Clients: Inviting partners or clients? Expenses for non-employees aren’t always as tax-friendly, so keep an eye on those guest lists if you’re planning for deductions.

Gifting the Aussie Way: Smart Presents for Your Team

Who doesn’t love getting a little something from Santa? But before you deck the halls with lavish gifts, consider these tips:

• Keep It Under $300: Gift hampers, vouchers, or festive wines are popular and, best of all, potentially exempt from FBT if they come in under the $300 mark. Remember it can’t be for entertainment if you want to keep away from FBT so those ticket to Cirque De Soli are not the best idea. It’s a great way to spread cheer without the tax gloom.
• Avoid Cash Bonuses: While everyone loves a little extra cash, handing out holiday bonuses is considered assessable income for employees and must be treated as wages, which means more paperwork and tax. Maybe save that idea for their pay packets!
• Fun and Functional: If you’re gifting branded items or quirky office gadgets, these are often deductible. Just remember: a new stapler doesn’t say “Merry Christmas” quite like a gourmet chocolate basket!

Client Gifting: Making a Memorable (and Deductible) Impression

We know your clients are fabulous, so treat them to a thoughtful gift—just not a gold-plated reindeer or anything extravagant. Here’s what works best:

• Practical and Appreciated: Branded diaries, eco-friendly goodies, or a nice bottle of wine can be a hit. Plus, they’re more likely to qualify as a business deduction.
• Be Reasonable: The ATO might raise an eyebrow if you send something too luxurious, so stick to gifts that say “I appreciate your business” rather than “I won the lottery!”

Bookkeeping Tips for a Stress-Free Christmas

Want to enjoy the silly season without any January headaches? Here’s what to do:

• Track Everything: Yes, even that cheeky little expense for Christmas crackers! Keep receipts, list who came to the party or received gifts, and store it all for easy accounting.
• Separate Your Costs: If your expenses cover both employees and clients, record them separately. It makes things clearer for tax purposes and keeps your bookkeeper from pulling their hair out.

The Final Wrap-Up

Christmas is a time to celebrate wins, big and small, and to thank the people who make your business what it is. So, party smart, gift wisely, and keep the taxman at bay. Your bookkeeper (and your future self) will thank you!

For more information, click here.