eWombat Search

Latest Accounting News
Hot Issues
Tax Office sounds alarm on popular property strategy
Our Advent calendar for 2018
‘Please do not panic’: ATO boss addresses STP concerns
Stop!! Don't do a paper Budget, use our online budgeting tools instead.
Employee Christmas Parties and Gifts – Any FBT?
Behavioural Coaching and your financial plans
FBT – Christmas Parties and Taxi Fares
Information needed to be the BBQ expert.
Tax consequences of trust vesting
Fringe Benefits Tax (FBT): employees’ private use of vehicles
ATO to contact clients over bank details
ATO claws back $850m in unpaid SG in FY 17-18
Appetite for property in SMSFs shows signs of life despite tough market
Superannuation gender gap narrowing, research shows
Identification numbers for directors
How financial advice helps create wealth.
Australia's vital statistics
Unlocking equity crowdfunding in Australia
$20m boost for SME clients looking to exporting
Work-Related Expenses
ATO updates crypto guidance
ATO zones in on hundreds of newly created reserves
Senate passes $20,000 instant asset write-off extension
Victorian Vacant Property Tax
Director Penalty Notices
ATO set to pounce on undisclosed income streams
In case you missed it – The company tax Bill that did pass Parliament.
GST spotlight headed to smaller end of town
Superannuation Amnesty – Maybe! Maybe Not!
ATO drills in car-sharing focus this tax time
Articles archive
Quarter 3 July - September 2018
Quarter 2 April - June 2018
Quarter 1 January - March 2018
Quarter 4 October - December 2017
Quarter 3 July - September 2017
Quarter 2 April - June 2017
Quarter 1 January - March 2017
Quarter 4 October - December 2016
Quarter 3 July - September 2016
Quarter 2 April - June 2016
Quarter 1 January - March 2016
Quarter 4 October - December 2015
Quarter 3 July - September 2015
Quarter 2 April - June 2015
Quarter 1 January - March 2015
Quarter 4 October - December 2014
Quarter 4 of 2016
Articles
Big-ticket tax set for government review
FBT – Christmas Parties and Taxi Fares
Unclaimed Monies - Christmas Project?
Employee Christmas Parties and Gifts – Any FBT?
‘Beware the tax man’ eyeing holiday period activity
Merry Christmas for 2016, a Happy New Year and a prosperous 2017.
Research reveals key to ‘high-performing’ firms
Late payments hitting SMEs hard
Estate planning issues flagged with $1.6m pension transfer cap
Travel to a workplace: What’s in, what’s out
New fleet “safe harbour” approach for car fringe benefits
Struggling Business Turnarounds
SMSF practitioners told to urgently address TRIS issues
$20,000 write off is only available for small business, right? Well…
Do you need an Employment Agreement?
What does the new withholding tax mean for your clients?
Domestic (non-marital) Relationships
Is there a problem with using your company’s assets for yourself?
SMEs at risk of ‘falling foul’ of ATO
Scams, fraudsters and viruses
Got your car log book ready?
‘Beware the tax man’ eyeing holiday period activity

 

The ATO is poised to home in on fringe benefits tax (FBT) on celebrations and gifts this festive season, according to one mid-tier firm.



       


 


Depending on where a Christmas party is held, how much is spent on each guest, and whether gifts count as entertainment, FBT may be applicable, said Mariana von-Lucken, tax partner at HLB Mann Judd Sydney.


“Businesses should keep in mind that there are two main methods for reporting FBT, the ‘actual’ and the ’50-50’ split method, and understanding how each of these work can help minimise the FBT liability,” she said.


“With the 50-50 method, FBT exemptions generally do not apply, regardless of the cost of any entertainment, so as a general rule, businesses are better off using the ‘actual’ method if entertainment expenses are likely to be under $300 a head,” she said.


Ms von-Lucken stressed the importance of keeping accurate records, adding that while the 50-50 split method usually requires less record-keeping, it can mean more FBT needs to be paid.


“It will depend on who is being entertained – clients or staff. If more staff attend, then the 50-50 method may help reduce the FBT liability,” she said.


“The 50-50 method basically means that FBT is payable on 50 per cent of the expense of providing meal entertainment to all guests, whether staff, clients or family.


“The actual method, on the other hand, means FBT is paid on all expenses for staff, but if any clients attend the event then there is no FBT payable on their expenses. Keep in mind that the client portion is not tax deductible and employers are not able to claim the GST in their business activity statements.


“Generally, using the actual method to report liabilities tends to ensure a lesser FBT liability; however it is important accurate records are kept to verify claims.


“Also, the method chosen applies for the entire FBT year, not per event, although for many businesses a Christmas party is the sole event they host for the year.”


Using business premises for a Christmas party is a fairly safe bet, however.


If the party is held on the business’ premises, on a normal working day, with just employees attending, there will be no FBT liability as long as the actual method of reporting is used, said Ms von-Lucken.


“There is also no limit on the amount that can be spent, and this includes expenses such as taxi fares for employees to get home after the party,” Ms von-Lucken said.


“If other people attend the party, such as spouses, the total cost per person must be less than $300 (including GST) to remain FBT-exempt.


“If the 50-50 method is used, then 50 per cent of all expenses will be subject to FBT regardless of how much or little is spent per guest. However, a GST credit is claimable for 50 per cent of the GST-inclusive cost of the food and drink, and a deduction is available for 50 per cent of the GST-inclusive cost, less any GST credit claimable.”


Further, if the party is held off the business premises, it will still be exempt from FBT if the cost per head is less than $300 as long as the actual method is used. No tax deduction is available or GST credits claimable in this instance.



KATARINA TAURIAN
Wednesday 20 November 2016
accountantsdaily.com.au




17th-December-2016
 

Stapleton Group: Suite C, 6 – 8 Floriston Road Boronia VIC 3155 | Phone: (03) 9760 7800 | Fax: (03) 9760 7860