Are you considering giving your employees a treat this year as a thank-you for their hard work? Certain gifts given to your employees may be claimable as a tax deduction under strict conditions and rules. During this time of giving, a Christmas gift can reward both the employee and the employer.
Any gift classified as entertainment cannot be claimed on your tax, regardless of the time of year. If you wish to claim your gifts as a tax deduction (generally a good idea), it’s best to give items classified as non- entertainment gifts. These types of gifts that are given to staff or associates are usually exempt from fringe benefits tax (FBT), with the item cost, as well as the GST, being claimable.
Certain gifts fall within the ATO’s guidelines on what is a tax-deductible gift. If you’re looking for ideas on what to give your staff this Christmas, consider:
- Beauty products
- Gardening Equipment
- Gift Vouchers
However, these gifts should not be more than $300 to claim the GST credit and not incur FBT. If the gift costs more than $300, you will still be able to claim a tax deduction and the GST credit. FBT will, however, be payable at the rate of 49% on the grossed-up value of the gift.
If you’re feeling more generous and want to thank your staff, bear in mind that any gifts that you give to your staff that could be considered a personal gift may not be claimed as a tax deduction. Those items that cannot be claimed under the minor benefits rule generally fall under the entertainment or recreational classification and could include:
- Tickets to the theatre or sporting events
- Movie tickets
- Club memberships
- A trip to the amusement park
- Live Events
Keep records of all of the expenses associated with purchasing gifts this holiday season for your staff so that we can assist with your business’s tax return.
Do you have more questions about your FBT gifting at the end of the year? For further information, you can consult with us. We’re here to help you