Q/ We are having a Christmas party for our employees and their partners, we may also be giving employees a Christmas gift. Can you tell me the FBT implications.
A/ The FBT rules in this area are quite complex and depend on whether or not you are a tax-paying or tax-exempt body. The rules are also different if you have the party on or off your business premises.
The answer may also depend on whether or not you use the 50-50 split method for meal entertainment.The ATO answers all your questions about Christmas Parties and FBT here:
http://www.ato.gov.au/General/Fringe-benefits-tax/In-detail/Fact-sheets/FBT-and-Christmas-parties/?default=&page=2
One exemption for tax-paying bodies that is often overlooked is the possibility of using the Minor Fringe Benefit exemption:
Having a Christmas party for an employee may be a minor fringe benefit, and so exempt from FBT if the cost of the party is less than $300 per person. Having their partners at the party may also be a minor fringe benefit and exempt if the cost for them is also less then $300.
Finally, providing a gift at the party could also fit under the minor fringe benefit (and so exempt) if the value of the gift is less than $300
Note: While the party and the gift are “associated benefits”, the ATO tells us to look at the value of each benefit separately to determine their value.
The ATO does require that the usual Minor Fringe Benefit exemption rules are followed even for Christmas parties and Christmas gifts. You can find those rules here:
http://www.ato.gov.au/General/Fringe-benefits-tax/In-detail/Exemptions-and-concessions/FBT-exempt-benefits/?default=&page=44#Minor_benefits