December, 2017 | Private Wealth Accountants

The festive season is just around the corner and if you are an employer you may be about to host – or you may already have hosted – a Christmas party for staff to celebrate the year’s achievements. If so, it is a good idea to know about your tax obligations and health and safety regulations when it comes to hosting a party for your team.

End-of-year parties are a great way to celebrate and to thank staff for all their hard work during the year. If you do host a party, make sure you know your obligations. We look here at the tax implications for hosting parties, and for giving gifts. If you are in doubt, please contact our office so that we can help you know what could be exempt, leaving you free to enjoy the festivities safe in the knowledge that you have things covered.

Tax obligations when hosting Christmas parties

From an income perspective you may be thinking in terms of how to allocate the costs of a Christmas party. The cost of providing a Christmas party is income tax deductible only to the extent that it is subject to fringe benefits tax (FBT). Therefore, any costs that are exempt from FBT (that is, exempt minor benefits and exempt property benefits) cannot be claimed as an income tax deduction. There is no separate FBT category for Christmas parties. Any fringe benefits provided by you, an associate, or under an arrangement with a third party to any current employees, past and future employees and their associates (spouses and children), may attract FBT.

Exempt benefits – minor benefits

The good news is that the provision of a Christmas party to an employee may be a minor benefit and exempt if the cost of the party is less than $300 per employee and certain conditions are met. The benefit provided to an associate of the employee may also be a minor benefit and exempt if the cost of the party for each associate of an employee is less than $300.

“Employers should note the ATO’s view to the application of the minor benefits exemption to Christmas parties and gifts. According to the ATO, the minor benefits threshold of less than $300 applies to each benefit provided, not to the total value of all associated benefits.”

Exempt property benefits

Other costs (such as those for food and drink) associated with Christmas parties are exempt from FBT provided they are incurred on a working day, on your business premises and any food and drink is consumed by current employees. A taxable fringe benefit will arise in respect of an associate of an employee who attends the party, if not otherwise exempt under the minor benefits exemption.

Gifts provided to employees at a Christmas party

The provision of a gift to an employee at Christmas time may be a minor benefit that is an exempt benefit where the value of the gift is less than $300. Where a Christmas gift is provided to an employee at a Christmas party that is also provided by the employer, the benefits are associated benefits, but each benefit needs to be considered separately to determine if they are less than $300 in value. If both the Christmas party and the gift are less than $300 in value and the other conditions of a minor benefit are met, they will both be exempt benefits.

Health and safety at Christmas parties

While your staff may be “off the clock”, you will probably still be responsible for their health and safety. Here are some suggestions to help your workplace celebrate safely:

Remind staff, perhaps in an email before the event that while the party is a time to relax, it’s still a work function. You could gently remind staff to be careful if they choose to drink alcohol.
Make sure that any alcohol is served responsibly and that there’s enough food and non-alcoholic drinks available, too.
Help your staff get home safely after the event. You could organise a bus, pre-order taxis, or arrange for designated drivers.

Speak to us

The FBT year runs from 1 April to 31 March. You may not be ready to prepare your FBT until after 31 March, but you may be preparing accounts now in order to allocate the costs of the Christmas party. Speak to us for further information.

Tax scams are real and taxpayers need to be vigilant about bogus calls, text messages and emails from scammers. Some scammers go to great lengths to deceive taxpayers, including impersonating government representatives on the phone, sending fraudulent emails and even creating fake websites. It’s important to stay informed about what the latest scams look like, and know what questions to ask so you can avoid being scammed.

The ATO warns taxpayers to always watch out for scammers. Each year, the ATO receives a growing number of reports from the public of new phishing scams – it detected over 17,000 scams during the first half of 2017. Not only do scammers try to steal money, they also try to steal identities. The Government has identified several cases of misuse of stolen personal information that have led to fraudulent income tax returns, as well as GST, superannuation and welfare frauds.

Scammers are becoming more sophisticated in their attempts to defraud the public and trick people into handing over money, their tax file numbers and other personal information. A recent stratagem is to telephone people, displaying an official-looking ATO number as a caller ID so the victim feels confident enough to engage with the scammer and will provide personal information – this type of impersonation is known as “spoofing”. Sending emails containing links to bogus websites that mirror the official ATO website is also still a popular scamming method.

The typical story is that a fraudster contacts a taxpayer out of the blue claiming that the taxpayer has overpaid taxes and is entitled to a refund. The fraudster often asks the taxpayer to pay an “administration” or “transfer” fee to obtain the refund. They may also ask for the taxpayer’s personal details, including financial details such as bank account information so that the “refund” can be transferred. If the taxpayer hands over money, chances are that it is never seen again, and no transfer is forthcoming.

Another tactic is when fraudsters phone to demand that people pay allegedly unpaid taxes. The ATO is aware of one such aggressive scam where taxpayers are threatened with arrest if they do not pay a fake “tax debt” over the phone. Scammers may also demand payment in gift cards, such as iTunes or prepaid Visa cards.

“Scams are most prevalent during tax time, but it’s important to remain vigilant for them throughout the year.”

If you receive an email, a text message (SMS) or an unexpected phone call from “the ATO” claiming that you are entitled to a refund, that you owe taxes or that you must confirm, update or disclose confidential details like your tax file number, delete the message (do not click any links or download any attachments) or hang up the phone.

From time to time, the ATO itself will send emails, text messages or official social media updates to advise you of new services. However, the ATO’s messages will never request personal or financial information by SMS or email, and its representatives will never ask you to pay money into a personal bank account.

If you receive a call, an email or an SMS and are concerned about providing personal information, you can call the ATO on 1800 008 540 (8 am to 6 pm, Monday to Friday), forward the suspicious email to ReportEmailFraud@ato.gov.au or check your myGov account for any message from the ATO.

You can also contact our office for more information if you have concerns.

Month: December 2017

Hosting Christmas parties – what you can claim