Fringe Benefits Tax (FBT) may not be the first thing you think of when planning your business Christmas party, but this complicated tax is important to consider during the festive season.

How can you avoid the FBT burden this holiday season?

The FBT that applies to your office Christmas party depends on factors including:

• Who is attending?
• Where you are holding your end of year celebration? and
• How much you spend per person?

To minimise the FBT arising from a Christmas party, consider hosting the event at the office on a working day, with employees only.

Such a party is typically exempt from FBT, regardless of the cost, making it a great option if you're spending $300 or more per person. You can generally also cover employees’ travel to and from the office without triggering FBT.

However, once you include plus ones, move the event outside the office, or factor in travel expenses, things get more complicated, and exemptions are less likely. For instance, if employees travel directly from home to an offsite event, those travel costs are also subject to FBT.

To ensure a smooth experience this holiday season, it’s essential to plan for both the Christmas party and the FBT that may arise.

The table below gives a summary of the FBT that may apply to your event.

FBT for Christmas parties

FBT and Christmas gifts

Christmas gifts given to an employee can be exempt from FBT as a minor benefit if its value is less than $300, even if given at a Christmas party that is also a minor benefit.

Client gifts are not subject to FBT.Provided client gifts do not represent entertainment, their cost may be tax deductible.