FBT on Christmas parties and gifts not straightforward

The Tax Office is reminding businesses that a number of factors need to be factored in to the administration of fringe benefits tax (FBT), including the associated costs as well as who receives the gifts or attends the functions – just internal employees or others, such as clients, partners and suppliers.

Additionally, functions are treated differently depending on whether they are held on the business’ premises or at an off-site location.

Similarly, when it comes to gifts, things will be different depending on whether it is employees or clients who receive them, and what type of gifts they are – food, wine or hampers are not treated the same by the Tax Office as event tickets.

Another discerning feature is that the rules differ between businesses and not-for-profit organisations.

More information on fringe benefits tax for employers can be found on the ATO website.

The Tax Office has previously warned that another common FBT mistake relates to private components of work-related travel, which can include attending Christmas functions.

Earlier in the year, a tax partner listed other FBT issues that tend to attract scrutiny by ATO auditors, including living-away-from-home allowances and employee rebates.