Why Plan Now
With the holiday season fast approaching, September and October are the best months to prepare for staff gifts, Christmas parties and client entertainment. Most of these expenses land in November and December , but by then, your options are limited.
Planning now gives you the chance to book venues, choose gifts and confirm budgets in a way that makes use of the available FBT exemptions, such as the $300 minor benefits exemption. Waiting until December often means higher costs, fewer choices and less flexibility to structure things tax-efficiently.
What the Rules Say
Here are some key rules and exemptions to keep in mind:
- Minor benefits exemption: A benefit under $300 (including GST), provided infrequently and irregularly, may be exempt from FBT.
- Meals on business premises: Food or drink provided on a working day at your business premises can be exempt as a property benefit in some cases.
- Off-site events and associates: If parties are off-site or family members attend, exemptions may no longer apply, so cost per head becomes important.
- Gifts vs entertainment: Non-entertainment gifts (like hampers or vouchers) are treated more favourably under FBT rules than entertainment gifts (like tickets or experiences).
Practical Tips to Reduce FBT Exposure
- Stick to the $300 limit per person (including GST) to keep within the minor benefits exemption.
- Host on-site during work hours where possible, as this often attracts more favourable FBT treatment.
- Review guest lists carefully, as inviting family or associates can change whether exemptions apply.
- Favour non-entertainment gifts such as hampers or vouchers over entertainment, which usually attracts FBT.
- Keep records. Track attendee lists, costs and whether items are entertainment or non-entertainment in case of an ATO review.
The festive season should be about rewarding your team, not worrying about unexpected tax bills. FBT rules can be tricky, but with early planning and good record-keeping, you can celebrate with confidence, knowing your people feel valued and your business stays tax-efficient.
