FBT on Work Christmas Parties & Gifts
As the end of the year approaches, businesses are gearing up for the festive season, which means planning the annual Christmas party and showing appreciation with gifts. While the cheer is high, so too are the complexities of Fringe Benefits Tax (FBT).
Getting the FBT treatment wrong can turn a simple celebration into an unexpected tax bill. As your trusted advisors at Ascent Accountants, here is a breakdown of the key tax rules, with a focus on the crucial $300 per person limit, to ensure your end-of-year generosity is tax-effective.
The critical $300 minor benefit threshold.
The Minor Benefits Exemption is your best friend for managing FBT. A benefit is generally exempt from FBT if its total notional taxable value is less than $300 (GST inclusive) per person, and it is provided infrequently and irregularly.
Christmas parties (entertainment)
The location and cost of your party are the key factors for FBT.
| Scenario | Cost Per Head | FBT Applies? | Income Tax Deduction? | GST Credits? |
|---|---|---|---|---|
| Off-site Party (Restaurant, Venue, etc.) | Under $300 | No (Minor Benefit Exemption) | No | No |
| Off-site Party (Restaurant, Venue, etc.) | $300 or more | Yes | Yes | Yes |
| On-site Party (Business Premises, Working Day) | Any cost | No (exempt property benefit for employees) | No | No |
Recap:
- Under $300 per head: if you host your party off-site (e.g. at a restaurant) and the GST-inclusive cost per person is less than $300, the event will generally be FBT-exempt under the minor benefits rule. However, the cost is then not tax deductible, and you cannot claim GST credits.
- $300 or more per head: If the cost of an off-site party is $300 or more per person, the entire benefit for that person becomes subject to FBT, and the expense then becomes tax deductible (including claiming GST credits).
On-site vs. off-site.
The location of your party provides two distinct tax outcomes for employees:
- On-site party (exempt property benefit): If you host the party on your business premises on a working day, the cost of food and drink provided to your current employees is generally exempt from FBT. Crucially, this exemption applies regardless of the cost per head. If you invite an employee's partner or family (associates), their portion of the cost must still be kept under $300 to qualify for the minor benefits exemption.
- Off-site party (minor benefits exemption): For parties held at a restaurant or other external venue, the Exempt Property Benefit does not apply. You must rely on the Minor Benefits Exemption by ensuring the cost remains under $300 per person for both employees and their associates to avoid FBT.
Important information about gifts.
The rules for gifts are more favourable than for parties, particularly for non-entertainment gifts.
| Gift Type | Cost Per Head | FBT Applies? | Income Tax Deduction? | GST Credits? |
|---|---|---|---|---|
| Non-entertainment (Hampers, Wine, Vouchers) | Under $300 | No (Minor Benefit Exemption) | Yes | Yes |
| Non-entertainment (Hampers, Wine, Vouchers) | $300 or More | Yes | Yes | Yes |
| Entertainment (Concert Tickets, Holiday Vouchers) | Under $300 | No (Minor Benefit Exemption) | No | No |
| Entertainment (Concert Tickets, Holiday Vouchers) | $300 or More | Yes | No | No |
For the most tax-effective outcome, you should aim to give non-entertainment gifts (like a gift card, hamper, or bottle of wine) that cost less than $300 (GST inclusive) per employee. These are FBT-exempt and fully tax deductible with GST credits claimable.
The Minor Benefits Exemption applies separately to the party and the gift. This means you can provide an off-site party under $300 per head and a non-entertainment gift under $300 per head, and both may be FBT-exempt.
For clients & suppliers.
The good news is that FBT rules generally do not apply to benefits provided to non-employees like clients and suppliers.
- Christmas parties (entertainment): The costs associated with clients or suppliers attending your Christmas party are not subject to FBT. However, the cost of entertaining clients is classified as a non-deductible entertainment expense, meaning you cannot claim an income tax deduction or GST credits for their portion of the party.
- Gifts (non-entertainment): Gifts given to clients or suppliers (e.g., wine, hampers) are not subject to FBT and are generally tax deductible with GST credits claimable, provided the gifts are for the purpose of generating goodwill or future income.
Don’t risk a law suit.
If you’re currently organising Christmas celebrations and need certainty on where FBT implications may be involved, contact the team at Ascent Accountants. We can help you navigate these rules to ensure a festive and responsible end to the year.
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If your business interacts with the public in any way (from welcoming customers into your shop to visiting client sites) then public liability insurance isn’t just “nice to have.” It’s essential protection. Whether you’re a sole trader, a café owner, or running a construction company, public liability insurance helps safeguard your business against unexpected (and often costly) accidents. What Is public liability insurance? Public liability insurance covers your business if a member of the public suffers injury, death, or property damage as a result of your business activities. In simple terms, it’s there to protect you financially if something goes wrong—such as a customer slipping in your store, a tradie damaging a client’s property, or a product you sell causing harm. Without it, you could be personally liable for significant compensation and legal costs. What does it cover? A typical policy covers: Injury or death to a third party caused by your business operations. Damage to property belonging to someone else. Compensation and legal costs you’re ordered to pay following a covered claim. For example, if a customer trips over a cable in your office or a carpenter cracks a client’s TV while working onsite, public liability insurance steps in to cover the costs. What isn’t covered? While every policy is different, public liability insurance usually won’t cover: Damage involving vehicles. Defective work. Breach of professional duty or negligence in advice (that’s covered by professional indemnity insurance). Defamation or advertising liability. Understanding these exclusions helps you choose the right combination of cover for your business. Who needs public liability insurance? If your business has any level of public interaction, you likely need it. Common examples include: Customer or supplier visits: If anyone comes to your premises or you work on theirs. Public events: Markets, expos, and pop-ups. Retail, trade, and construction: High public contact increases your risk. Leased premises: Many shopping centres and landlords require proof of cover. Contractor or license requirements: Many trade licenses (like electricians and plumbers) require it to operate. Even if it’s not legally required, most Australian businesses choose to have public liability insurance for peace of mind. How much cover do you need? The level of cover depends on your industry, business size, and risk exposure. Most businesses opt for between $5 million and $20 million. It’s worth reviewing your policy regularly, especially if your operations expand or you start working in new environments. Is it compulsory in Australia? Public liability insurance isn’t legally mandatory for all businesses, but some industries and licences make it a condition of operation. For example, in Queensland, electrical contractors must hold a minimum of $5 million in public and product liability cover. Similarly, councils or venue owners may require proof of insurance before approving an event or leasing a space. Don’t risk a law suit. Being sued for negligence can be financially devastating. Even a minor incident can mean you lose hundreds of thousands—not to mention the impact on your brand and business reputation. Public liability insurance ensures your business can keep operating, even when the unexpected happens. If you’re unsure whether your current cover is adequate, our team at Ascent Accountants can help you review your business risks and recommend the right level of protection for your situation. Contact us today to learn more.
It’s very common for retirement priorities to shift over time. But for some, the change arrives with a jolt. You may spend years—even decades—planning exactly what your post-work life will look like. While life can throw a curveball into your plans at any stage, the closer you get to retirement, the more unsettling the disruption can be. Whether it’s family breakdowns, the death of a loved one, an inheritance received, or unexpected expenses, you'll face a different personal and financial landscape. One that no longer matches the retirement you envisioned. Adjusting your working life. When a major life change hits, the most important rule is: don't rush anything. While you're reshaping your future and contemplating big moves, avoid making any rash decisions that are irreversible. The event may alter the required length of your working life or your willingness to continue working: Health issues could force you to retire earlier than planned A substantial inheritance might enable a more enjoyable, earlier exit from work. Conversely, a divorce late in life, particularly for someone with high spending habits, might necessitate staying chained to a desk longer. The separation may leave you with an unexpected mortgage or simply drain your finances through the legal process, creating difficulties. Make a basic plan. Take the time to sit down and rationally think through what your new retirement might involve. If retirement is still five to 10 years away, that's a good timeframe to start contemplating your next steps. The most critical step is to determine how much money you will need to spend. While most people worry about whether they "have enough money," the key question is almost always, "How much do I need to spend in retirement?". Consider this example: If you retire with $1 million and your annual spending requirement is $50,000, you're likely secure. However, if you have $1 million but need to spend $150,000 per year, you have a problem. You'll need to either dramatically increase your savings or significantly reduce your spending expectations. If you are struggling with these figures or want a professional opinion, see a financial adviser ( we can direct you to one ). Paying for a few hours of their time will help you consider things you hadn't thought about. A change of pace. Remember, retiring from your main career does not mean leaving the workforce for good. You have options: Moving part-time in your current job for a few years, using your extra days for hobbies. Taking on volunteer work. Leaving a stressful executive role for paid work you actually enjoy. Hopefully, your surprises on the path to retirement are positive ones. If they are not, don't panic. Stay calm and seek advice. We can help. Early advice and planning can make a real difference in managing your retirement well—understanding the tax implications is a huge part of that. Don’t wait — let us help you !
