Redlands Coast Chamber of Commerce
AS Queensland businesses prepare for Christmas celebrations, accountants are reminding employers to be mindful of the rules around Fringe Benefits Tax (FBT) to avoid unexpected costs.
With many workplaces organising staff lunches, end-of-year functions and festive gifts, understanding what can and cannot be claimed is becoming increasingly important.
FBT is a tax paid by employers when they provide non-cash benefits to staff, such as entertainment, gifts, or personal use of work assets.
While most Queensland small businesses do not deal with FBT regularly, many are caught out each year during the Christmas period when spending naturally increases.
Under the Australian Tax Office rules, most Christmas-related spending falls under the “minor benefits exemption”
This means that if a gift or event costs less than $300 per employee, and is provided infrequently, it will generally not attract FBT.
However, depending on the type of gift, it may or may not be tax deductible.
Non-entertainment gifts such as hampers, bottles of wine or store vouchers are fully deductible and do not incur FBT when kept under the $300 threshold.
However, entertainment items including restaurant meals, alcohol served at events, or tickets to concerts or sporting matches are not tax deductible, even when supplied under the $300 limit.
Christmas parties also fall into the entertainment category.
If held off-site at a venue such as a pub or restaurant, the per-head cost is usually exempt from FBT if it remains under $300.
But employers should note that entertainment expenses under this threshold still cannot be claimed as a tax deduction.
Queensland accountants say the biggest confusion for small businesses comes from assuming all Christmas expenses are deductible.
“People are often surprised to learn that a simple staff lunch, even under $300 per person, can’t be claimed,” one adviser noted.
“It’s not about how generous a business is – it comes down to how the ATO classifies each type of benefit.”
Businesses are encouraged to plan their Christmas spending early and keep records to avoid any issues during tax time.
