Plan your Christmas tax claims before you book your Christmas party

Taking clients out for lunch vs sending them a gift this Christmas

At Christmas, you may want to give your clients a special treat to show your appreciation for their business throughout the year. However, there are some important considerations to keep in mind regarding tax deductions.

Gifts can encourage customers to recommend your services. They are usually tax deductible because they promote your business.

Send them a gift, but not an entertainment gift. ‘Entertainment Gifts’ are not tax deductible, and these include things like theatre, music, sporting tickets or holidays. Stick to bottles of wine, hampers or other goods.

The cost of entertaining clients is not tax deductible, even at Christmas.  

FBT implications when holding a staff Christmas Party

As long as you stick to the rules the costs (such as food and drink) associated with Christmas parties are exempt from FBT. You must hold them on a working day at your business premises and current employees only must be in attendance.

If you hold your Christmas Party off premises i.e., in a restaurant, make sure the cost per employee (and their associates) is under $300 per head. This will avoid any FBT implications. 

Be aware – there is still no tax deduction for the staff Christmas Party and you also can’t claim GST credits.

Gifts to employees at Christmas Parties and FBT 

As long as the gift is under $300 in value there is no FBT implications.  Ensure your gift is not an "entertainment gift" or you won't be able to get a tax deduction for it.

Claiming tax deductions on charity donations

If the organization is a DGR, which most major charities are, you can claim a tax deduction.

For gifts of money of $2 or more, you can claim a deduction. You need to keep the receipt or have the credit card statement.

You won't be able to claim a gift or donation if it provides you with a personal benefit. Examples of this would be raffle tickets, chocolates, pens or dinners. If you attend a fundraising event you may be able to claim a deduction if the amount spent is over $150. Check with your TaxAssist Accountant for more information.

Claiming airfares this Christmas if travelling on business and pleasure

If the primary purpose of your trip is for business purposes you may claim 100% of the airfare. This applies even if you spend some of that time away visiting friends and family.

You can claim your accommodation if your work activity lasts for at least two days in a row. You can also claim travel and meals you eat whilst working, but you cannot claim Passports, Visas, and insurance. 

If you are traveling for business AND to catch up with relatives, tax law requires you to properly apportion your costs and deduct accordingly. For example, if you stay for two weeks with family and only have one or two business meetings, the business costs are considered incidental and will be harder to claim. Check with your TaxAssist Accountant for more information.

Our services

We have created a handy Tax Tips guide for Christmas that you can download here for your ease of reference.

TaxAssist Accountants is here to help with all the financial aspects of running your business. Give us a call on 02 9174 5757 or fill in our enquiry form and we can set up a free initial consultation.

Date published 15 Nov 2023 | Last updated 16 Nov 2023

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.