by Michelle Adams | Dec 4, 2015 | Business
As you would probably know from being caught out before, the dreaded FBT has a one way attraction with gifts, entertainment and other benefits. For a Small Business employer, there is an effective 40% added cost to provide a tax deductible benefit that is subject to FBT compared to a non-deductible benefit that is exempt from FBT.
Thankfully though, Santa’s elves have left some sneaky hints for us small business owners to ensure our families won’t be left with moldy Christmas turkey in sacrifice for a lovely Christmas bonus for our staff.
How would your office space look as a party venue..?
Where are you going to hold this years Christmas celebrations? You’ve been staring at that trestle table near the office kitchen for months thinking how good it would look with a festive table cloth over the top, surrounded by your cheerful employees enjoying a ‘light morning or afternoon tea’…. Probably not ideal BUT there ARE benefits. For the most part, the cost of ‘a light meal’ consumed by employees on business premises on working days is exempt from FBT. The cost of these will, however, be non-deductible for income tax purposes and no GST credits can be claimed.
Keep it under $300 Big Spender!
There’s a little secret the elves have been keeping under their sleeves. The minor benefits exemption. What’s this about you ask? Well… the $300 minor benefits exemption applies to each person and to each benefit, meaning each employee and their associates can be provided with food and drink to the value of less than $300 (GST Inclusive) and the employer (you) will not incur an FBT liability. If the expenditure is regarded as entertainment and if it is an exempt minor benefit, it will be exempt from FBT, it will not be deductible for income tax purposes and no GST credits may be claimed.
Gifts are the GO!
Don’t get too excited, no need to shower your staff with gifts…a sprinkle is enough. We all love a good Christmas party but sometimes the memories (or lack of) and post party gossip make that messy night one people would prefer not to remember. How about a gift? Still keeping in line with the ‘minor benefit’ (under $300 per employee) rule you may be able to find a gift that will not only make your employee feel super lucky but will also act as a tax deduction and GST claimable expense for you. Everyone wins! ‘Give me so ideas!’ You yelp at the screen. Here goes….
Skincare & Beauty products
As long as your gifts are ‘non-entertainment’ gifts they will usually be exempt from FBT and also tax deductible and will usually offer some handy GST credits.
How do I avoid The Grinch though?
Good question! The more you try and think of a tactical way to get around The Grinch (FBT) and still acquire a tax deductible and GST claimable gift, the more you will be disappointed. Keep your mind clear of entertainment. The following items would be classed as entertainment and should be avoided if you wish to avoid FBT.
Tickets to a musical/play/movie/sporting events
Providing a holiday
Taking your staff out for dinner and drinks
Tickets to a theme park
Don’t get caught out this Christmas. If you’re unsure about a benefit you’re planning on supplying to your employees don’t hesitate contacting us. We don’t want to discover a nasty overindulgent FBT filled expense in your accounts!
For all your business assistance needs, or to get more information on anything we have mentioned here, please call Abacus Taxation on (07) 3208 9889, or head to www.abacustaxation.com.au/contact to get in touch.