Very quickly it seems we have arrived at the time of year to start planning our festive season celebrations! It's now time to plan just how you will reward your team and your clients for working with you throughout the course of the year. A question we are often asked by our clients is what and how much is deductible when it comes to our end of year festivities.
When it comes to Christmas parties, you can spend up to $300 per staff member which will be 100% deductible.
If it exceeds these limits, your spend could be subject to Fringe Benefit Tax and not be considered a tax deduction. If you do plan to spend in excess of $300 per staff member, we recommend you speak to your accountant to get further advice on this.
You can also give gifts up to the value of $300 per staff member and it be tax deductible.
For example, one of our client's gives our staff $250 in gift vouchers as a Christmas gift. These vouchers are certainly appreciated at a time of year when personal costs can escalate significantly.
It works for them. The vouchers are essentially a gift of pre-tax money. If they were to give the equivalent as a bonus payment, they would have to gift $450 for them to actually get the $300 in the hand. Also, by giving gift vouchers, they don't pay super or workers comp on it this amount.
And yes, you can double dip. You can spend up to $300 per person on a Christmas party as well as up to $300 on a gift and this amount of $600 will be fully tax deductible.
A wonderful way to show your appreciation to your clients for their loyalty and custom throughout the year is to host an end of year party or present them with gifts. The full amount of gifts and party spend is 100% deductible when spending on clients.
If you are unsure about which business expenses are deductible, we recommend you check with your accountant before you spend the money on them!
For more information, visit wrightsca.com.au/our_services/accounting/tax