It seems there is a Christmas party or end-of-year event every week at the moment.
Putting on a function for your staff or clients can be a great way to end the year, and ensure that everyone starts 2016 in a positive frame of mind. It's an opportunity to rewardstaff who have excelled over this year and acknowledge the loyalty of clients.
But is it tax deductible? The answer is generally half is and half isn't. If you put on a party for your staff and clients, you can usually only claim 50 per cent of the cost as tax deductible, and 50 per cent of the GST.
This applies in most situations: An afternoon at a corporate box, dinner with the team in a restaurant, parties on boats and so on.
Entertainment expenses that you incur through business-boosting activities, like that morale-lifting party, are usually 50 per cent deductible. In some cases, you can claim 100 per cent of the cost, most commonly when the expense is incurred while travelling - good news if you are planning a staff do in Honolulu. Other instances where you can claim the full amount include food or drink at a conference or course that goes for more than four hours, morning and afternoon teas on the premises and meal allowances given to staff working overtime, which could apply to some over the Christmas period.
Light refreshments for your management team may also count for a 100 per cent tax deduction.
Keep all your invoices and statements so you can back up what you claim. Any contributions towards the function from the staff social club reduce the amount you're able to claim. You may also need to check your liability for fringe benefit tax. .
Some businesses on a tight budget may be dreading the costs. Think about setting up a social club so staff can pitch in for a lavish party next year.
