Throwing a staff party can be a great way to see out the year and celebrate successes, but there are tax considerations to think about.
You can claim some costs of a party or staff gifts, but they may be subject to fringe benefit tax. This is paid on benefits workers get as a result of their employment.
Half your holiday party expenses may be claimed in your GST and income tax returns if the expenses relate to your business. Expenses can include:
- food and drink
- venue hire.
Business Gifts and Entertainment
Generally, you can claim the costs of gifts as a business expense, eg hampers or gift vouchers. But you may need to pay fringe benefit tax on these gifts.
A meal out provided by the business is an entertainment expense and you can claim 50% as a business expense.
Giving to charity
You can deduct 100% of the cost of entertainment you provide to members of the public for charitable purposes. For example, if your business donates food to a party at a hospital.