With Christmas fast approaching it is useful to remember that
the Fringe Benefits Tax ("FBT") minor benefits exemption
threshold is now $300 (previously $100). With this in mind, the
value of minor and infrequent rewards and gifts that can be
provided to your employees without you as the employer incurring
any FBT liability is quite significant.
The ATO released Taxation Ruling TR 2007/12 'Minor
Benefits' on 19 December 2007, which highlighted the fact that
the exemption provides opportunities for employers to spend much
more on the provision of entertainment fringe benefits to their
employees. The exemption only applies to employers who adopt the
actual method of accounting for entertainment expenditure for the
FBT year, which requires actual costs of the provision of the
entertainment to be recorded. This benefit is particularly helpful
as we are approaching the Christmas festive season where
expenditure can be up to $300 per employee before a FBT liability
is incurred. The new rules also entitle benefits provided to
employee's spouses up to $300 to the full FBT exemption.
There is now greater scope to provide gifts to employees at a
Christmas party availing the employer with an additional $300
exemption. The provision of a gift at the Christmas party, while
treated as an associated benefit of the dinner, is considered
separately in determining whether the minor exemption threshold
applies. If the value of the Christmas party and the gift to the
employee is less than $300 each, then both are considered to be
While Christmas parties held off the employer's business
premises can take advantage of the generous increase in the minor
benefits exemption, an alternative is that the costs associated in
providing food and drink is fully exempt from FBT if provided on a
'working day on the employer's business premises and
consumed only by current employees.' This includes Christmas
parties, however, where associates of the employee attend such
expenditure will be a taxable fringe benefit where the value of
their benefit exceeds the exemption threshold.
It is important to note that an income tax deduction is not
available for the provision of exempt minor benefits as these
benefits are not subject to FBT.
The change in legislation is a great opportunity to reward
employees for a year of hard work as employers can spend much more
on their employees without incurring any FBT.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The income tax treatment of any property lease incentive will vary, depending on the nature of the inducement provided.
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