The holiday season is a time for celebration, but it’s also a time to stay mindful of Fringe Benefits Tax (FBT) when planning parties and gifts for employees. Here’s how you can minimise your liability while ensuring a memorable festive season.

1. The $300 Minor Benefits Exemption

Keeping costs below $300 per employee for parties or gifts can classify these expenses as minor benefits, making them exempt from FBT. This applies to non-entertainment gifts like hampers, vouchers, or bottles of wine. Be cautious: if a gift is provided at a function, the ATO includes it in the $300 calculation.

Hot Tip! Opt for cost-effective, non-entertainment gifts for employees to maximise exemptions.

2. Use the “Otherwise Deductible” Rule

When employees could claim an expense as a deduction themselves, it may qualify as an FBT exemption. For example, work-related training courses or professional books can be considered exempt. 

Hot Tip! Gifts with dual benefits—professional and personal—can also be a thoughtful way to show appreciation.

3. Non-Entertainment Gifts Are Key

Entertainment-related expenses, such as tickets or holidays, are typically taxable. Instead, focus on non-taxable items like:

• Flowers or skincare products
• Personalised gifts like stationery or calendars

These not only stay within the minor benefits exemption but also avoid the complexities of FBT.

4. Plan Your Functions Strategically

If you’re hosting a holiday party, consider:

• Onsite Celebrations: Hosting on your business premises may reduce FBT liability.
• Separate Gifts: Plan gifts outside of the function to avoid exceeding the minor benefits threshold.

FBT rules can be tricky, and the ATO continually updates its guidance. Staying compliant requires regular reviews of the regulations and careful planning of costs.

Plan Ahead with Kaleidoscope Accounting

FBT planning is all about balancing festive generosity with financial responsibility. At Kaleidoscope Accounting, we specialise in helping businesses navigate these complexities. Let us help you maximise your budget and minimise your tax liability this holiday season.

Contact us today at 0417 859 700 or email rebecca@kaleidoscopeaccounting.com.au.