Xmas time! Time to dust off that Xmas Tree and deck the halls for that end of year Xmas work party.
Stock up on those employer Xmas gift hampers!!
Woah, hold up, before you get too excited with the festive season, do you know what entertainment expenses and Xmas gifts you can claim back on, and which ones may incur FBT.
There are 3 main types of entertainment expenses that your Xmas staff party, employee gift hamper and even client gifts can fall into.
100% Deductible, not liable for FBT
Christmas Vouchers and presents (not food and wine), fall into this one, 100% deductible. However, there is a catch. The total cost of the gift must be below $300, per employee. So go ahead and get your hard-working staff a little something this year.
100% Deductible, and liable for FBT
You are liable for FBT on the employee and even client gifts if the amount per employee exceeds the $300 threshold.
50% deductible, and not liable for FBT
Christmas Staff Party - falls into this category, whether it’s a lunch outing or a full on dinner. The party doesn’t have to be on the business premises either, you can hire a boat, provide food and drink and have a brilliant time.
Gifts to Clients - also falls under the 50% deductible. Wine, box of chocolates etc., as long as it’s under $300 per client, then feel free to show your appreciation to your clients and suppliers.
What about a cash bonus for your employee?
This is a little bit different. Cash bonuses must go through the PAYE system and is looked upon as a lump sum pay out and gets taxed based on the employee’s income range.
Still not 100% sure or simply want to learn more head over to IRD Entertainment Expenses
Want to catch up and go over this in more detail. Feel free to contact us we are here to help.
Cristina Canard is the principal accountant at Apex Accountancy Ltd. Cristina keeps up to date with all the relevant tax changes in New Zealand.