Tis the season to be jolly! That’s right, we’re only a few weeks away from Christmas, and if you’re an owner of a small business, you’re probably dreading the idea of throwing a work Christmas party. Christmas parties involve a lot of organising and planning, and of course budgeting! And then there’s always the threat of fringe benefits tax on top of all of that. It’s enough to make you almost want to skip Christmas completely.
But don’t fear, because there are ways you can make sure your staff Christmas party isn’t the expensive burden you think it will be. How will you do that? It’s simple, it’s time for you to save yourself some cash from tax for your next staff Christmas party.
But first you may be thinking, do I even need to have a staff Christmas party? It may sound like a lot of effort, but think of the benefits – yes, really.
As the end of the year approaches, staff Christmas parties can help boost staff morale and create a more welcoming (for newbies) or engaging environment (for longer term team members) within your business. The happier your employees feel, the greater the chance that that happiness will translate to their work, where you could see improvements in productivity and quality. And isn’t that what you’re after in 2015?
Okay so now let’s get into how you can have yourself a wonderful little tax deductible staff Christmas party.
It’s all about the ‘Minor Benefit’ rule – have you heard of that one? Under the Minor Benefit rule, an expense under $300 becomes a notional taxable value that isn’t subjected to the fringe benefits tax payments. This is great for you because it means small entertainment expenses can be tax deductible. If you really want to reinforce this minor benefit rule, make sure you host the party during work hours on your business premises. By doing this you’re likely to avoid it becoming a fringe benefit. And avoiding that also means avoiding the annoying lodgement forms and paperwork required.
So how do we do that?
- Ask your employees to bring a plate. It’s simple, and will save your business on expenses that you won’t be able to get a tax deduction on.
- Instead of normal fringe benefits, reward staff by offering free seminars or trade shows.
- Gifts such as flowers, wine and gift vouchers do not fall in the fringe benefits tax as they aren’t classified as entertainment.
So if you really want to reward your employees for their hard work this year, the best outcome for your business this Christmas is to give your employees non-entertainment gifts that cost less than $300, giving you a tax deductible option with no fringe benefits likely to be payable.
And remember, whilst this is the season to be jolly, if you want the ‘jolliness’ to continue into a happy new 2015 for your business, we would love to help. You can call Kerry on 6023 1700, drop us a note or connect with Kerry via LinkedIn.
