The top Christmas tax questions

Staff gifts

The key to Christmas presents for your team is to keep the gift spontaneous, ad hoc, and from a tax perspective, below $300 per person. $300 is the minor benefit threshold for Fringe Benefits Tax (FBT) so anything at or above this level will mean that your Christmas generosity will result in a gift to the Tax Office as well.

If you are planning to provide your team with a cash bonus rather than a gift voucher, this will be taxed in much the same way as salary and wages. A cash bonus at Christmas is not a gift; it's still income for the employee.

The staff Christmas Party

If you really want to avoid tax on your work Christmas party then host it in your office on a work day. This way, Fringe Benefits Tax is unlikely to apply regardless of how much you spend per person. Also, taxi travel that starts or finishes at an employee's place of work is also exempt from FBT.

If your work Christmas party is out of the office, keep the cost of your celebrations below $300 per person. This way, you won't generally pay FBT because anything below $300 per person is a minor benefit and exempt.

Client gifts

As long as the gift you give to the client is given for relationship building with the expectation that the client will keep giving you work, then the gift is generally tax deductible as long as it doesn't involve entertainment.

Charitable gift giving

The safest way to ensure that you or your business can claim a deduction for the full amount of the donation is to give cash to an organisation that is classified as a deductible gift recipient (DGR). The charity must be a DGR and the donation must be a gift, not an exchange for something material.