Latest News

Hot Issues
spacer
Access to more resources and tools than most websites.
spacer
Tax Return Mistakes
spacer
SMSF advice appetite strong, says ASIC
spacer
Taxpayers confused by Scott Morrison’s $1,080 tax refund
spacer
Common STP set-up mistakes - ATO
spacer
Proposal to hold directors liable for GST set to pierce corporate veil
spacer
September 2019 - vital statistics for Australia
spacer
Tax Commissioner wants to turn black economy to ‘lighter shade of grey’
spacer
Changes to the Private Health Insurance Statement
spacer
Up to 9 in 10 ‘other’ expenses adjusted as ATO reveals dodgy claims
spacer
Downsizer Super Contribution
spacer
Tax payers to receive beefed up tax returns.
spacer
10 top global corporations since 1998
spacer
Catch-up Contributions
spacer
Life Insurance
spacer
Community tip-offs trigger ATO visits
spacer
Australia at a glance
spacer
2019: Tax Time Checklists - Individuals; Company; Trust; Partnership; and Super Funds
spacer
Small business clients need to be ready for STP by 30 September
spacer
Big four firm outlines new financial year checklist for SMSFs
spacer
Alert - Online Share Accommodation
spacer
ATO flashes warning over $7.2bn car expenses claims
spacer
Vital statistics for our great nation.
spacer
3 out of 4 tax dob-ins are about business
spacer
Tax on compensation received for inappropriate advice
spacer
‘Extra care’ crucial in avoiding ATO spotlight this tax time
spacer
ATO clears up FAQs about Single Touch Payroll
spacer
GST reporting: common errors and how to correct them
spacer
LRBAs, guarantees in need of review after property market falls
spacer
Victorian Property Valuation Cycle
Article archive
spacer
Quarter 2 April - June 2019
spacer
Quarter 1 January - March 2019
spacer
Quarter 4 October - December 2018
spacer
Quarter 3 July - September 2018
spacer
Quarter 2 April - June 2018
spacer
Quarter 1 January - March 2018
spacer
Quarter 4 October - December 2017
spacer
Quarter 3 July - September 2017
spacer
Quarter 2 April - June 2017
spacer
Quarter 1 January - March 2017
spacer
Quarter 4 October - December 2016
spacer
Quarter 3 July - September 2016
spacer
Quarter 2 April - June 2016
spacer
Quarter 1 January - March 2016
spacer
Quarter 4 October - December 2015
spacer
Quarter 3 July - September 2015
spacer
Quarter 2 April - June 2015
spacer
Quarter 1 January - March 2015
spacer
Quarter 4 October - December 2014
Quarter 4 of, 2016 archive
spacer
Big-ticket tax set for government review
spacer
FBT – Christmas Parties and Taxi Fares
spacer
Unclaimed Monies - Christmas Project?
spacer
Employee Christmas Parties and Gifts – Any FBT?
spacer
‘Beware the tax man’ eyeing holiday period activity
spacer
Merry Christmas for 2016, a Happy New Year and a prosperous 2017.
spacer
Research reveals key to ‘high-performing’ firms
spacer
Late payments hitting SMEs hard
spacer
Estate planning issues flagged with $1.6m pension transfer cap
spacer
Travel to a workplace: What’s in, what’s out
spacer
New fleet “safe harbour” approach for car fringe benefits
spacer
Struggling Business Turnarounds
spacer
SMSF practitioners told to urgently address TRIS issues
spacer
$20,000 write off is only available for small business, right? Well…
spacer
Do you need an Employment Agreement?
spacer
What does the new withholding tax mean for your clients?
spacer
Domestic (non-marital) Relationships
spacer
Is there a problem with using your company’s assets for yourself?
spacer
SMEs at risk of ‘falling foul’ of ATO
spacer
Scams, fraudsters and viruses
spacer
Got your car log book ready?
‘Beware the tax man’ eyeing holiday period activity

 

The ATO is poised to home in on fringe benefits tax (FBT) on celebrations and gifts this festive season, according to one mid-tier firm.

       

 

Depending on where a Christmas party is held, how much is spent on each guest, and whether gifts count as entertainment, FBT may be applicable, said Mariana von-Lucken, tax partner at HLB Mann Judd Sydney.

“Businesses should keep in mind that there are two main methods for reporting FBT, the ‘actual’ and the ’50-50’ split method, and understanding how each of these work can help minimise the FBT liability,” she said.

“With the 50-50 method, FBT exemptions generally do not apply, regardless of the cost of any entertainment, so as a general rule, businesses are better off using the ‘actual’ method if entertainment expenses are likely to be under $300 a head,” she said.

Ms von-Lucken stressed the importance of keeping accurate records, adding that while the 50-50 split method usually requires less record-keeping, it can mean more FBT needs to be paid.

“It will depend on who is being entertained – clients or staff. If more staff attend, then the 50-50 method may help reduce the FBT liability,” she said.

“The 50-50 method basically means that FBT is payable on 50 per cent of the expense of providing meal entertainment to all guests, whether staff, clients or family.

“The actual method, on the other hand, means FBT is paid on all expenses for staff, but if any clients attend the event then there is no FBT payable on their expenses. Keep in mind that the client portion is not tax deductible and employers are not able to claim the GST in their business activity statements.

“Generally, using the actual method to report liabilities tends to ensure a lesser FBT liability; however it is important accurate records are kept to verify claims.

“Also, the method chosen applies for the entire FBT year, not per event, although for many businesses a Christmas party is the sole event they host for the year.”

Using business premises for a Christmas party is a fairly safe bet, however.

If the party is held on the business’ premises, on a normal working day, with just employees attending, there will be no FBT liability as long as the actual method of reporting is used, said Ms von-Lucken.

“There is also no limit on the amount that can be spent, and this includes expenses such as taxi fares for employees to get home after the party,” Ms von-Lucken said.

“If other people attend the party, such as spouses, the total cost per person must be less than $300 (including GST) to remain FBT-exempt.

“If the 50-50 method is used, then 50 per cent of all expenses will be subject to FBT regardless of how much or little is spent per guest. However, a GST credit is claimable for 50 per cent of the GST-inclusive cost of the food and drink, and a deduction is available for 50 per cent of the GST-inclusive cost, less any GST credit claimable.”

Further, if the party is held off the business premises, it will still be exempt from FBT if the cost per head is less than $300 as long as the actual method is used. No tax deduction is available or GST credits claimable in this instance.


KATARINA TAURIAN
Wednesday 20 November 2016
accountantsdaily.com.au

© O'Brien and Partners 2011 - All Rights Reserved | 91 Station Street, Malvern VIC 3144 | Tel: 03 9509 3911 | Fax: 03 9509 3922