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The party matrix
| Scenario | FBT? | Deductible and GST credits? |
|---|---|---|
| Party on business premises, on a work day, current staff only | No, it is an exempt property benefit | No, exempt entertainment is not deductible |
| Off-site party, under $300 a head, annual event | No, it is a minor benefit | No, the same trade-off applies |
| Off-site party, $300 or more a head | Yes, FBT on the staff and their partners' share | Yes, FBT-paid entertainment becomes deductible with GST credits |
| Clients at any party | Never, because clients are not employees | Never. Client entertainment is non-deductible, full stop |
Read the columns together and the design appears: the system lets you either escape FBT or claim the deduction on entertainment, not both. A $290-a-head party avoids 47% FBT at the cost of a 25 to 47% deduction, which is almost always the right trade. That is why the $300 threshold is the number to cater to. It is per benefit, per person, and the Uber home afterwards is a separate benefit with its own $300 test.
Gifts: the one genuinely good deal
| Gift type | Under $300 | $300 and over |
|---|---|---|
| Non-entertainment, such as a hamper, wine to take home, a gift card or flowers | No FBT, deductible, GST credits. The sweet spot | FBT applies, and it is deductible |
| Entertainment, such as event tickets, restaurant vouchers or holidays | No FBT, but not deductible | FBT applies, and it is deductible |
The planning writes itself: $250 gift cards or hampers beat $250 concert tickets. Identical cost to you, but the non-entertainment version is deductible with GST credits while the tickets are pure after-tax spend. Client gifts follow the same split with no FBT dimension: non-entertainment client gifts with a business purpose are deductible, and client entertainment never is.
The paperwork that makes it stick
- A minor benefits register recording date, benefit, per-head value and frequency, because infrequent is part of the exemption.
- Invoices split between staff, client and partner headcounts.
- Entertainment coded correctly in the bookkeeping. December's mixed invoices mis-coded as fully deductible staff amenities is a standard adjustment when reviewed.
- The FBT return for the year ending 31 March is where over-$300 events were meant to land.
Frequently asked questions
Is a Christmas party tax deductible?
How do I avoid FBT on the Christmas party?
Are staff gifts tax deductible?
Can I claim taking clients to lunch?
Does the $300 include the taxi home?
General information only - not personal tax, financial or legal advice. Consider your own circumstances or speak to a registered tax agent. Remission of penalties or interest and payment plans are decisions of the ATO and outcomes can't be guaranteed.