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See below for updates for Tax Determinations, Australian Taxation Office warnings, annual federal budget, income tax return checklists and changes in legislation for superannuation, small business, individuals, trusts and partnerships.

Christmas Parties & Gifts 2019

Your Comprehensive Tax Guide to Year-end Staff Parties & Christmas Gifts

With the well earned holiday season around the corner, many employers will be planning to reward staff with a celebratory party or event. However, employers need to be aware of the FBT and income tax implications of providing 'entertainment' to staff and clients.

Year-end (and other) staff parties - FBT and 'entertainment'

Under the FBT Act, employers must choose how they calculate their FBT meal entertainment liability, and most use either the 'actual method' or the '50/50 method', rather than the '12-week method'.

Using the actual method

Under the actual method, entertainment costs are normally split up between employees (and their family) and non-employees (e.g., clients). Such expenditure on employees is deductible and liable to FBT. Expenditure on non-employees is not liable to FBT and not tax deductible.

Using the 50/50 method

Rather than apportion meal entertainment expenditure on the basis of actual attendance by employees, etc., many employers choose to use the more simple 50/50 method. Under this method (irrespective of where the party is held or who attends) 50% of the total expenditure is subject to FBT and 50% is tax deductible.

However, the following traps must be considered:

  • even if the function is held on the employer's premises – food and drink provided to employees is not exempt from FBT;
  • the minor benefit exemption* cannot apply; and
  • the general taxi travel exemption (for travel to or from the employer's premises) also cannot apply.

(*) Minor benefit exemption

The minor benefit exemption provides an exemption from FBT for most benefits of 'less than $300' that are provided to employees and their associates (e.g., family) on an infrequent and irregular basis. The ATO accepts that different benefits provided at, or about, the same time (such as a Christmas party and a gift) are not added together when applying this $300 threshold.

However, entertainment expenditure that is FBT exempt is also not deductible.

Note: 'Less than' $300 means no more than $299.99! A $300 gift to an employee will be caught for FBT, whereas a $299 gift may be exempt.

 

Example: Christmas party

An employer holds a Christmas party for its employees and their spouses – 40 attendees in all. 

The cost of food and drink per person is $250 and no other benefits are provided. 

If the actual method is used:

For all 40 employees and their spouses – no FBT is payable (i.e., by applying the minor benefit exemption), however, the party expenditure is not tax deductible.

If the 50/50 method is used:

The total expenditure is $10,000, so $5,000 (i.e., 50%) is liable to FBT and tax deductible.

 

Christmas gifts

With the holiday season approaching, many employers and businesses want to reward their staff and loyal clients/customers/suppliers. Again, it is important to understand how gifts to staff and clients, etc., are handled 'tax-wise'.

Gifts that are not considered to be 'entertainment'

These generally include a Christmas hamper, a bottle of whisky or wine, gift vouchers, a bottle of perfume, flowers or a pen set, etc.

Gifts that are considered to be 'entertainment'

These generally include, for example, tickets to attend the theatre, a live play, sporting event, movie or the like, a holiday airline ticket, or an admission ticket to an amusement centre.

 

As these tax considerations can be bewildering and overwhelming, please do not hesitate to contact us if you have any queries.

2017/18 Tax Saving Strategies

A must read for Individuals and Businesses with our annual end of financial year checklist for tax minimisation.

Key notes for Individuals:

  • Depreciable Plant - assets costing $300 or less,
  • Clothing Expenses,
  • Self Education Expenses,
  • Other Work-Related Expenses,
  • Rental Property Expenses and;
  • Home Office Expenses.

Key notes for Businesses:

  • Prepayment Strategies,
  • Maximising Deductions,
  • Accelerating Expenditure and;
  • Accrued Expenditure.

Read more

If you have any questions, please do not hesitate to contact us.

 

With the 31 October 2017 lodgement date deadline for 2017 individual tax returns approaching for those who do not lodge with a registered tax agent, it's worth taking the time to review any of your expenses during the financial year, incurred as part of your work or business, as you may be able to claim a deduction to reduce your tax bill.

In general, expenses are claimable when:

  • You spent the money and weren't reimbursed by your employer
  • The money spent was a work-related expense
  • You have an official record of the expense – such as a receipt, bank statement or diary entry (though in some cases you may not have to show evidence if your total claim for work-related expenses is $300 or less)
  • If the cost was for both work and personal use, for example home internet, you can only claim a portion of the expense.

The Australian Taxation Office (ATO) provides detailed categories of expenses you can claim on its website, which you can refer to for details on what you can claim. Some of them are outlined below.

Read more…

2016/17 Tax Saving Strategies

A must read for Individuals and Businesses with our yearly checklist for tax saving strategies for 2016/17;

Key notes for Individuals:

  • Depreciable Plant - assets costing $300 or less,
  • Clothing Expenses,
  • Self Education Expenses,
  • Other Work-Related Expenses,
  • Rental Property Expenses and;
  • Home Office Expenses.

Key notes for Businesses:

  • Prepayment Strategies,
  • Maximising Deductions,
  • Accelerating Expenditure and;
  • Accrued Expenditure.

Click here to read more to minimise your 2017 tax.

If you have any queries, or would like to discuss tax saving strategies further, please do not hesitate to contact us.

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