Christmas is a great time to reward your employees. But be aware of how these payments and benefits are treated for tax purposes.
Cash Bonuses
Christmas bonuses paid in cash are treated as ordinary income. You must withhold PAYG and include them in STP reporting. Super guarantee applies to cash bonuses too.
Christmas Parties
If the cost per employee is under $300 (including GST), it’s generally exempt from FBT under the minor benefits exemption. Above $300 per head, FBT may apply. On-premises parties for current employees only are typically FBT-exempt regardless of cost.
Gifts to Staff
- Under $300: Generally FBT-exempt as a minor benefit. This includes gift cards, hampers and vouchers.
- Over $300: FBT applies. Consider keeping individual gifts under the threshold.
- Entertainment gifts (e.g., concert tickets) have different rules — talk to your tax adviser.
Key Tips
- Keep records of all Christmas-related expenses
- Separate entertainment expenses from other business costs
- Remember that FBT year runs April to March, not the financial year
Talk to our team before the silly season to plan your Christmas giving tax-efficiently.