Re: Christmas gifts for staff -- Cox Business Accountants

[ Show ]

Support VoyForums

[ Shrink ]

VoyForums Announcement: Programming and providing support for this service has been a labor of love since 1997. We are one of the few services online who values our users' privacy, and have never sold your information. We have even fought hard to defend your privacy in legal cases; however, we've done it with almost no financial support -- paying out of pocket to continue providing the service. Due to the issues imposed on us by advertisers, we also stopped hosting most ads on the forums many years ago. We hope you appreciate our efforts.

Show your support by donating any amount. (Note: We are still technically a for-profit company, so your contribution is not tax-deductible.) PayPal Acct: Feedback:

Donate to VoyForums (PayPal):

[ Login ] [ Contact Forum Admin ] [ Main index ] [ Post a new message ] [ Search | Check update time ]

[ Next Thread | Previous Thread | Next Message | Previous Message ]

Date Posted: Friday, December 17, 11:34:13am
Author: Carly Evans
Subject: Re: Christmas gifts for staff
In reply to: Businessman 's message, "Christmas gifts for staff" on Tuesday, December 14, 10:59:33am

Businessman,

In regards to buying your staff a Christmas present, it really depends on what you buy. If buy them something like a Christmas hamper, pen set or a bottle of wine (as long as it is not consumed on the employer's premises) then you will be able to claim a tax deduction for this expenditure. Usually this means gifts that are relatively inexpensive and are not considered entertainment.

However, if you decided to give them tickets to the movies or a sporting event, then this would not be deductible as it is considered an entertainment expense.

In relation to your question about taking staff out to lunch, this can become a complicated matter and really depends on the circumstances. Please have a read of the information below which was in our December Newsletter which explains these different circumstances.

"Christmas parties for employees are classified as entertainment by the Tax Office and may be subject to Fringe Benefits Tax (FBT) at a rate of 48.5%. This can mean the after tax cost of your party is more than you actually pay.
One way to avoid paying FBT is to hold your Christmas party on the employer's premises on a working day. The cost of party is then exempt from FBT and no tax deduction can be claimed. The after tax cost of your party is the amount that you actually paid. This will most often result in a lower tax cost for the Christmas party (if the employer's tax rate is less than the 48.5% FBT rate). Watch out though if the employee's family comes along as FBT is payable on the cost of food and drink provided to them and a deduction is allowed (unless the benefit to the employee's family is under $100, then FBT is avoided and no deduction is allowed).
If you hold your work Christmas party away from your business premises, FBT applies and the cost is tax deductible. If the cost is less than $100 per employee, it may be exempt from FBT and no deduction is allowed. If your employee brings his family, remember the $100 limit is the total for all the family.
This is a very confusing and complicated area. But remember, the cheapest after tax cost for your Christmas party will usually be to avoid FBT and get no deduction.
There are also certain items which are exempt from FBT which you can give to employees and get a tax deduction for. These include electronic diaries, personal organisers, briefcases, tools & tool boxes used in your business, lap top computers, and business or trade magazine subscriptions. Also, gifts such as a Christmas hamper or bottle of wine (valued at less than $100 per employee) are usually tax deductible and exempt from FBT."

Hope this helps you.

[ Next Thread | Previous Thread | Next Message | Previous Message ]