Christmas party FBT checklist for business

1 Cash bonuses Please circle
Has the business paid employees with cash bonuses as a year-end reward?

If yes, has the employer considered the following:

  • Timing: Whether the amount would be paid in December or in the new year?  Should it be provided for in the accounts at month-end?
  • PAYG withholding: Has the appropriate amount of PAYG withholding for lump sum payments been calculated and provided for?
  • Superannuation Guarantee: Has superannuation guarantee of 9.5% (for 2014-15) been provided for with respect to the relevant bonus paid?
  • Payroll tax: Have state-based payroll taxes been considered with respect to bonus?

Note that a deduction should be available for bonuses paid under the general deduction provision as a business cost.

Yes

 

Yes

Yes

Yes

Yes

No

 

No

No

No

No

2 Christmas parties and related entertainment and transport (employees and associates)
Has the business provided food, drink, entertainment and associated travel
(ie. ‘meal entertainment’ benefits) during the period to employees and or associates?

If yes, have the following been considered?

 

Yes

 

No

 

Basis for valuing
‘meal entertainment‘
Please circle method chosen
What basis has the business adopted (or intends to adopt) in valuing ‘meal entertainment’ fringe benefits for the FBT year?

 

Actual basis (ie. property, expense payment or residual)

The business must value each ‘meal entertainment’ based on the fringe benefit type (eg. property, expense payment or residual).

Exemptions such as minor benefits exemption, taxi travel exemption and on-site consumption may be applied.

Continue below for outcomes.

50/50 split or 12 week register

The business must value all ‘meal entertainment’ provided during the FBT year using one of these methods.

No scope available for applying FBT exemptions to such benefits (eg. minor benefits exemption).  That is, individual benefits cannot be selected for exemption.

Skip to item 3 below.

 

Tax implications of ‘meal entertainment benefits’
If an actual basis of valuing ‘meal entertainment’ is chosen, the following tax implications should be considered:
Scenario FBT/payroll tax liability? Income tax deduction? GST credit available?
Food and drink provided on business premises

Has the employer provided ‘meal entertainment’ to employees (and/or associates):

  • on a working day on business premises, and
  • consumed by current employees?

If yes:

Employee:

Associate:

Associate (minor benefit):

 

 

 

 

 

No (1)

Yes

No (2)

 

 

 

 

 

No

Yes

No

 

 

 

 

 

No

Yes

No

Food and drink provided offsite 

Has the employer provided ‘meal entertainment’ to employees (and/or associates) offsite (eg. at a restaurant)?  If yes:

If property, expenses payment or residual fringe benefit provided:

If minor benefit provided:

Yes

No (2)

Yes

No

Yes

No

Transport to and from function

Has the employer provided transport to or from the function to employees (and/or their associates)?

If yes, have the following been considered?

If taxi travel:

Employee:

From work premises to function  (vice versa)

From function to non-work location (vice versa)

Minor benefit (if no exempt taxi travel)

Associate:

Any taxi travel (irrespective of origin or destination)

Minor benefit

If transport other than taxi (eg. hired bus)

Employee:

Any travel (irrespective of origin or destination)

Minor benefit

Associate:

Any travel (irrespective of origin or destination)

Minor benefit

No (3)

Yes

No (2)

Yes

No (2)

Yes

No (2)

Yes

No (2)

No

Yes

No

Yes

No

Yes

No

Yes

No

No

Yes

No

Yes

No

Yes

No

Yes

No

3 Christmas gifts

Please circle

Has the employer provided gifts to employees or associates?

If yes, the tax implications for certain gifts are as follows:

Yes

No

FBT/payroll tax liability?

Income tax deduction?

GST credit available?

Non-entertainment examples 

Gift vouchers – department store (eg. Myer/Target)

Hampers (containing consumables)

Consumables – such as chocolates

Electronic equipment (eg. iPod)

Toys and kids’ gifts

If above gifts, or similar, a minor benefit

Entertainment examples

Champagne

Dinner voucher

Theatre tickets or similar

If above gifts, or similar, a minor benefit

Yes (4)

Yes (4)

Yes (4)

Yes (4)

     Yes (4)

No (2)

Yes (4)

Yes (5)

Yes (4)

No (2)

Yes

Yes

Yes

Yes

     Yes

Yes

Yes (6)

Yes (6)

Yes (6)

No

Yes

Yes

Yes

Yes

     Yes

Yes

Yes

Yes

Yes

No

(1)    An exemption for food and drink provided to employees (not associates) on a working day (only if actual basis is used).

(2)    Must be less than $300 (also only if actual basis for valuing benefit used).

(3)    Exemption for employee (not associate) if travel is single trip from or to workplace.

(4)    Are property fringe benefits, and must value using actual basis.

(5)    A meal entertainment benefit. Businesses may elect to apply 50/50 split or 12 week register to value.

(6)    Some “entertainment” can be covered under income tax provisions, however deduction can be denied unless provided as fringe benefit