It’s party time: But what does that mean for your books and employees?
It’s that time of year when Christmas parties are still in full swing (and they will continue into the new year too), and you and your employees deserve to let your hair down after a big year.
To make sure it all stays fun and you don’t end up feeling anxious about where you stand, it’s important to know your obligations as an employer.
So what are they?
Employers have a duty of care
According to Work Safe Queensland, your duty of care as an employer extend to a work function just like your employees are at work during normal working hours.
Other areas you need to know about include the responsible service of alcohol, as other health and safety precautions at the venue. The duty of care and your obligation also covers employees on their way home from the event as well as inappropriate behaviour, discrimination and harassment.
Letting your employees know of your duty of care and their responsibilities is standard practice too.
There’s some tax stuff you need to know
Now, also around this time of year, it’s important to know what you can and can’t claim on your Christmas party.
Claiming your festive items can be a bit tricky.
It’s a great idea to give your staff Christmas gifts and throw them a party for the end-of-year-celebrations, but there are guidelines when it comes to entertainment and some items and expenses are not covered.
Here is an outline of the terms and conditions when it comes to Christmas parties and gifts:
Christmas parties at a restaurant for employees and partners are considered “meal entertainment” and are not income tax deductible and GST cannot be claimed. If the cost per person is less than $300 inclusive of GST per person and is infrequent, is likely to be exempt from FBT due to the minor benefits exemption.
Physical gifts (such as skincare, flowers, wine, beauty products, hampers, perfume) or non-entertainment gifts that are under $300 inclusive of GST per person are usually free from FBT. You can claim the GST.
Christmas bonuses paid through payroll like a wage is also tax deductible, just remember you will pay super on bonus wages.
Gift cards less than $300 are not considered entertainment so you can claim the tax deductions, but must be infrequent. There is no GST to claim on gift cards.
Gifts that employees would ordinarily claim on tax and claim the GST anyway is also an option. For example, a course, workshop or tools.
Entertainment gifts to staff (such as tickets to movies/theatre/amusement park/sporting events, holiday airline tickets), which are under $300 per person will not attract FBT, are not income tax deductible and you cannot claim GST credits. If over $300, FBT will apply but a tax deduction and GST credits can be claimed.
- Non-entertainment gifts given to clients, contractors and suppliers don’t fall within the FBT guidelines because they are not considered staff. You can still claim on tax and claim GST.
Now, your job is to go and enjoy yourself and have fun with your employees. They have worked hard for you this year and deserve the gifts and party you have organised for them.
Before you go on leave for the year, I encourage you to hit reply and book in a complimentary consultation with me in the new year so we can get on top of your bookkeeping obligations, including your Christmas party and gifts.
HOT TIP: As I can’t give taxation advice, the above is general advice only. I recommend you consult your accountant regarding what you can and can’t claim.
Meanwhile, if you are a small business and you need a new bookkeeper in the new year, need some training or need to get your books and accounts back into a working order so you can grow your business with new clients and more sales, please get in touch today and let us help you.
For more information, please contact Judy on 0431 103 257 or email at firstname.lastname@example.org to arrange an appointment.