CPA Australia senior manager tax policy Elinor Kasapidis believes clients should once again turn their minds to potential tax implications of providing Christmas parties or gifts to their employees.
“FBT is a perennial problem at this time of year,” Ms Kasapidis said. “CPA Australia is encouraging tax advisers to remind their business clients that Christmas parties and gifts for employees may attract FBT liability.
“Factors such as where the food and drinks are served, who the guests are, and how much is spent will determine if there are FBT implications.
“Tax advisers should encourage their clients to stay below the minor benefit threshold of $300, or hold celebrations on business premises and only invite current employees to access the exempt property benefit.
“Entertainment expenses are not tax-deductible unless they are subject to FBT, so businesses can’t claim a tax deduction for the cost of a party if they satisfy the FBT exemptions.”
Recent FBT updates
Separately, the ATO recently updated its Fringe benefits tax – a guide for employers to reflect the increase of the small business entity turnover threshold from $10 million to less than $50 million per annum.
As such, from 1 April 2021, businesses with an aggregated turnover of less than $50 million will be exempt from the 47 per cent fringe benefits tax on car parking benefits provided to employees if the parking is not provided in a commercial car park.
Likewise, multiple work-related portable electronic devices provided to employees will be exempt from FBT — even if the devices have substantially identical functions.
Jotham Lian is the editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.
Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.