At the end of the year, you may look for extrinsic ways to thank your hardworking employees or faithful customers/clients.

A work Christmas/end-of-year party may be a method employed by many businesses to demonstrate their gratitude towards staff, but the expense can be a deciding factor.

Christmas/holiday parties are regarded as “entertainment” expenditures, which means they are not tax-deductible. The employer may have to pay FBT if the party costs $300 or more per person.

It may also be that an end-of-year party might not be feasible for your business this year.

Instead, it may be a better idea to thank your staff through the act of giving certain items known as “non-entertainment” gifts. These non-entertainment gifts must cost less than $299.99 but are fully tax-deductible and carry no FBT.

Non-entertainment gifts are usually exempt from FBT when the total cost of the gift is less than $299.99 (inclusive of GST). An employer can also claim tax deductions and GST credits for every non-entertainment gift to staff members. These gifts could include beauty or skincare products, flowers, wine, gift vouchers or hampers.

If you provide a similar gift to the spouse/partner of an employee, the FBT exemption will also be valid. This can be a nice way to say thank you to the hard-working members of your staff while promoting a positive work culture.

Providing your employees with gifts considered to be “non-entertainment gifts” but costing $300 or more (including GST) is less tax effective. Even though the gift giver can still claim a tax deduction and GST credit, FBT must be paid at 49%.

You can still give staff members entertainment gifts as a way of saying thank you, though this is a less beneficial and tax-favourable option from an employer’s point of view. Examples of entertainment gifts include tickets to a play, sports event, musical, theatre, or even providing a holiday.

These gifts may not be FBT payable if they cost less than $299.99 (including GST) or are claimable for a tax deduction or GST credit. However, if they cost more than $300 (including GST), an employer can claim a tax deduction and GST credit, but FBT is payable at 49%.

Some fringe benefits (such as these gifts) may need to be included in payment summaries. When the value of certain fringe benefits amounts to more than $2,000 in an FBT year, it is your responsibility to record that amount in your payment summary.

Want to know more about possible FBT exemptions that might apply to gifts you give to your employees this holiday season? Speak with us about how you can make this work for your situation.

Australians can experience a range of natural disasters, such as floods, bushfires, tropical cyclones, severe storms and even earthquakes. These events can cause devastation to communities and financial hardship for individuals and businesses.

While FBT may not be at the forefront of your mind when helping your employees after an emergency, it can result in potential exemptions depending on the assistance provided.

It is worthwhile to know what kinds of benefits you, as a business owner, can provide for different emergencies that will be excluded from FBT. Businesses that provide benefits to employees during an emergency situation are likely to have assistance costs be exempt from fringe benefits tax (FBT).

Exemptions will apply to benefits you provide to employees who are being impacted by or will be potentially impacted by:

• A natural disaster such as a bushfire, flood or cyclone.
• An accident such as a car accident.
• A serious illness such as cancer.
• An armed conflict such as a war.
• A civil disturbance such as a riot.

The benefits you provide to your employees that can be exempt from FBT include health care, temporary repairs or emergency needs such as food supplies, clothing, accommodation, transport or household goods. These can be of great use to employees looking to get back on their feet.

Short-term benefits you provide to an employee, such as temporary repairs to damaged property due to a natural disaster, are exempt from FBT. However, long-term employee benefits after an emergency event will not be exempt, such as a replacement car, new house or ongoing renovations.

When providing health care, certain requirements must be followed. FBT exemptions only apply to health care provided:

• For an employee of yours or from a related company.
• On your premises or the premises of a related company
• By a company doctor at an accident site.
• At or near an employee’s worksite.

If you decide to pay for your employee’s ongoing medical or hospital bills, then the FBT exemption will not apply.

The benefits costs would be deductible to the employer but not assessable to the employee and will not appear as part of their salary and wages on their payment summary.

These benefits can be of use to not only the individual employees but to your business as well. Regarding FBT, exempt benefits can be a great way to lower the tax bill. They also provide a way to assist your employees during times of great hardship.

However, to ensure you’re maximising your FBT benefits potential, consult with a registered tax agent or adviser for the right information and assistance in handling these matters.

In emergency situations like the COVID-19 pandemic, there are certain benefits you can provide your employees or their associates which may be exempt from fringe benefits tax (FBT).

The fringe benefits tax is a tax which employers must pay on certain benefits they provide for their employees, their employees’ families and associates. However, with emergency circumstances such as the pandemic-level coronavirus, the ATO is providing FBT emergency assistance exemptions which apply to many common scenarios that your business may be experiencing.

In the case of COVID-19, the FBT emergency assistance exemption applies to:

• Help businesses which have had to relocate their employees who needed to self-isolate and are from a high-risk area.
• Paying for emergency meals and accommodation for employees who are stranded overseas due to travel restrictions.
• Paying for flights for overseas employees returning to Australia.
• Exempting transport fees for an employee to seek medical assistance from their workplace.
• Exempting equipment purchased to provide to work-from-home employees such as laptops, portable printers or other portable electronic devices.
• The minor benefits exemptions may apply for minor, infrequent and irregular benefits of under $300.

With all these exemptions to keep in mind, remember that your FBT return is due 21 May 2020 unless the ATO accepts your request for an extension on lodgement time, you have been granted a deferral or you lodged electronically through a registered tax agent.

Your FBT returns can only be lodged through the practitioner lodgement service (PLS) which requires a Standard Business Reporting (SBR) enabled software from a digital provider. Your digital service provider should be partnered with the ATO in integrating tax and superannuation services into your practice management software.

Businesses that provide benefits to employees during an emergency situation are likely to have assistance costs be exempt from fringe benefits tax (FBT).

It is worthwhile to know what kinds of benefits you as a business owner can provide for different emergencies that will be excluded from FBT. Exemptions will apply to benefits you provide to employees who are being impacted by or will be potentially impacted by:

• A natural disaster, such as a bushfire, flood or cyclone.
• An accident, such as a car accident.
• A serious illness, such as cancer.
• An armed conflict, such as a war.
• A civil disturbance, such as a riot.

The types of benefits you provide to your employees that can be exempt from FBT include health care, temporary repairs or emergency needs such as food supplies, clothing, accommodation, transport or household goods.

Short-term benefits you provide to an employee such as temporary repairs to damaged property due to a natural disaster are exempt from FBT. However, long-term benefits provided to employees after an emergency event will not be exempt, such as a replacement car, new house or ongoing renovations.

When providing health care, there are certain requirements that must be followed. FBT exemptions only apply to health care provided:

• For an employee of yours or from a related company.
• On your premises or the premises of a related company.
• By a company doctor at an accident site.
• At or near an employee’s worksite.

If you decide to pay for your employee’s ongoing medical or hospital bills, then the FBT exemption will not apply.

The costs of benefits would be deductible to the employer but not assessable to the employee and will not appear as part of their salary and wages on their payment summary.