|
Home
Practice History
Our People
Awards
Our Services
Contact Us
Due Dates
Casebook Articles
Newsletters
| |
The year has flown and Christmas is just
around the corner.
If you are in business you might be considering the tax deductibility of some of
those Christmas expenses. Most businesses host a party for their staff, and this
can mean a large party where partners are also invited, or just lunch at a
restaurant for staff members.
What should we consider when we are accounting for Christmas activities and
gifts?
Jenny Brown, of Brown’s Gourmet Cellar, consulted me on this matter the other
day.
“We are giving our staff members a gourmet hamper this year,” said Jenny. “It
will be from stock in the shop naturally. We are also hosting a Christmas wine
tasting instead of the staff party. This will be publicised in the Weekender,
and will be open to everyone. Can you please tell us what is claimable and what
is not?”
“No problem, Jenny,” I replied. “The Christmas wine tasting for the public will
be fully tax deductible. The effect of course would have been different if you
had issued invitations to your customers personally. This would then mean that
you are providing a form of entertainment and as such this would not have been
tax deductible. On that occasion, benefits provided to your employees would have
been subject to fringe benefits tax.”
“As we have discussed before, when you take your employees and their associates
to lunch or to a staff Christmas Party, the cost of their meals are subject to
fringe benefits tax and tax deductible, and the cost of meals for other non
related people, are not tax deductible.”
“In respect of the gifts to staff, they are normally what you sell in the
business, and are less than the $500 threshold where fringe benefits tax would
apply. As such there is no FBT and are tax deductible. The $500 threshold would
apply to all provisions for the year.
“Thank you once again,” said Jenny. “We appreciate your valuable advice before
we enter into these transactions.”
|