Will small businesses benefit from a tax holiday?

The jolly season was fast-approaching, and thousands of Australian small businesses will have surely thrown fun Christmas parties for their employees, clients, partners, and so on, of course, with social distancing being implemented. However, whether your business is on the nice or naughty list, suffering from a tax hangover is a consideration that you need to consider before splurging your staff with presents and other stuff like food and drinks.

To help you save and take advantage of claimable deductions while having fun during the holiday season, here are several reminders about Christmas tax that you should keep in mind:

For Employees

When throwing a year-end Christmas party for your employees, always consider the Fringe Benefits Tax (FBT) conditions and exemptions. Doing so will help you avoid paying tax on your Christmas party costs. The Australian Taxation Office (ATO) acknowledges that an employer is exempted from paying tax on Christmas party expenses if the price is less than $300 per employee. If the cost exceeds the given limit, the entire fee will be subject to FBT.

For Clients, Suppliers, and Business Partners

Throwing a Christmas party for your clients, suppliers, and business partners is a different story. Unlike your employees, the Fringe Benefits Tax isn’t applicable to your other business as mentioned above, associates. Moreover, you can claim a tax deduction for the Christmas gifts your business customers and suppliers receive if expected to generate business profits in the future.

Talking To An Expert

Plan ahead for your end of year 2021 festivities. For all your finance, tax accounting, and small business needs, you can count on Dillon Partners to provide you with top-notch services. For more than 25 years, Dillon Partners has provided both small and medium-sized businesses with accounting, auditing, taxation, and management consulting services that supported their growth as a business.