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Reward your Employees this Festive Season
- By Michael van Schaik
- Published 5/12/2008
- Moore Tax News
- Unrated
Reward your Employees this Festive Season
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 exempt benefits.
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. Should you have any queries in relation to this matter, please do not hesitate to contact Michael van Schaik on:
Email: mvanschaik@moorestephens.com.au
Phone: (03) 9614 4444
Web: www.moorestephens.com.au
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 exempt benefits.
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. Should you have any queries in relation to this matter, please do not hesitate to contact Michael van Schaik on:
Email: mvanschaik@moorestephens.com.au
Phone: (03) 9614 4444
Web: www.moorestephens.com.au
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