How to make your end of year function a tax write-off

Holding an end of year function on business premises during work hours is the most tax effective option for businesses. The cost of a light meal and drink will be tax deductible to the employer with no FBT liability incurred. The meal can be several courses and include a variety of foods, but must exclude alcohol. In addition, the food must not be so lavish, such as a 10-course degustation, that it turns into entertainment.

In reality, most Christmas parties are not held on business premises, but at a restaurant. If the cost of food, drinks and alcohol is kept to less than $300 per employee, no FBT is payable by the employer. Unfortunately for the employer, they will not be able to claim a tax deduction or GST credit for the cost.

However, a non-entertainment gift valued at less than $300 given to an employee will be tax deductible to the employer.

Tax deductible gifts include:

• A coffee machine.
• Books or novels.
• Flowers or chocolates.
• Christmas or gift hamper.
• Bottle of wine, spirits or liqueur.
• A bottle of perfume or aftershave.
• Vouchers for retailers e.g. David Jones, Myers, Jack London, etc.
• Watch, handbags or wallets.

Here are 10 reasons why you must have an end of year function for your business:

• End of year functions boost positivity.
• Reward hard work and build staff morale leading to increased productivity, retention, and attendance.
• Demonstrate your appreciation as a business.
• Giving your staff a chance to blow off steam together can help improve staff relations, increase collaboration and in turn boost productivity.
• Celebrate success and learn from failure.
• Create a sense of unity by reflecting on the past and looking to the future.
• Company values are reinforced.
• Team spirit goes through the roof increasing staff loyalty.
• Throwing a great end of year bash says a lot about what kind of leader you are and can foster respect and comradery.
• Everyone needs a break and a chance to have fun!