Generally the safest way to ensure that a Christmas party is deductible is to hold it on your work premises. If you Christmas party is held on a work day and on premises will be exempt from Fringe Benefits Tax and therefore the costs for all employees to attend will be deductible. If you are having their families attends ensure that the cost per person in under the $300 per person and all will be deductible.
For most though the fun on Christmas is to hold the event off premises. The general rule of thumb is that if the event is less than $300 per head you will not have to worry about Fringe Benefits Tax (FBT Tax). Note that there is some wriggle room if the employer wants to provide the employee with a gift as well this would be considered a different “FBT” event and as such would also be exempt from FBT if under the $300.
Please remember though if the expense is exempt from FBT then you are not entitled to claim a deduction for the expense nor are you entitled to claim the GST on the expense.
Please find below an easy to follow table of tax deductibility of Christmas cheer:
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