CA ANZ head of tax Michael Croker said trans-Tasman businesses can now choose whether to stick with virtual meetings, invest in face-to-face events in one central place or a mixture of both.
“Australia’s events industry is already busy promoting attractive conference packages, emphasising the benefits of bringing work teams, customers and suppliers together again after a year of online meetings,” Mr Croker said.
“Now that JobKeeper has finished, many livelihoods now depend directly and indirectly on businesses opening their wallets. Businesses that can afford to do so can do much to help those who work in travel, events and hospitality.”
Mr Croker said, in most cases, face-to-face work events will include social activities designed to re-establish important business and workplace connections.
However, he also warned businesses that there are some tax do’s and don’ts when it comes to entertainment.
“Those arranging work-related functions need to be mindful of the adverse income tax and fringe benefits tax consequences when the agenda is more about having fun than business,” Mr Croker said.
“Event organisers can achieve ‘win-win’ outcomes — a tax-deductible business event with no FBT exposure. Protecting GST input tax credit entitlements is also an important business consideration.”
Apart from establishing the objectives of the event, Mr Croker noted that relevant questions your accountant will consider include whether the event involves the provision of food, drink or recreation in an entertainment context, whether the entertainment is incidental to the main purpose, and whether relevant income tax and FBT concessions are available.
In particular, he said the ATO takes a close interest in extravagant entertainment provided at swanky locations, with pleasant diversions on offer and lots of private time on the agenda to enjoy them.
“Another tax trap some employers fall into is arranging an event that passes the tax tests and then paying for a tacked-on holiday, with family members flown in to share the fun,” Mr Croker said.
“Post-COVID get togethers whether in Australia or New Zealand can be planned to achieve lots of good business objectives and allow participants to have some fun, without nasty tax surprises.”