What you need to know to claim staff gifts and celebrations this year

The countdown to Christmas has begun! Decorations are up, and Christmas parties are booked in. Many Australian businesses will pay for their staff, and in some cases spouses, to kick up their heels at an end of year celebration or give a nice gift.

As an employer, there are a few things to be aware of when planning Christmas parties or giving gifts, if you want to keep your tax bill in check or claim a deduction on your festivities.

Christmas Parties

Holding a Christmas party off-premises for your staff is regarded as an ‘entertainment’ expense.

Entertainment is not tax deductible unless it is associated with paying Fringe Benefits Tax (FBT).

An exemption may be available for FBT if the cost per employee of the party is less than $300 (and similar celebrations are infrequent).  However, if it’s not associated with paying FBT, then it will not be tax deductible.

If you’re feeling generous and the cost is $300 or more per employee, then you can claim the cost as a tax deduction, but you have to pay FBT.

If you plan to run a function for clients and referrers, there are no FBT implications for these individuals, but the costs are not income tax deductible either.


Gifts below $300 are a tax deductible expense providing they are classified as a ‘non-entertainment’ gift. The same rule applies for other special occasions such as birthdays. As long as these gifts are ‘infrequent’, you can claim a tax deduction for amounts of less than $300 for employees and there is no FBT.  Gifts of $300 or more will be subject to FBT but will still be deductible.

If your gift giving extends to your clients and suppliers, the gifts should still be tax deductible however the $300 limit does not apply.

One of the most important things to note when planning a deductible gift is to ensure the gift meets the ‘non-entertainment’ classification. Gifts such as gift vouchers, a bottle of alcohol, hampers, groceries, games, flowers, beauty products and computers all fit the ‘non entertainment’ classification.

Gifts that are considered ‘entertainment’ and therefore not deductible include theatre, movie or sporting event tickets, holiday or accommodation or tickets to amusement parks.

Tax implications to keep in mind

The GST input tax credits for the cost of the party or gift can only be claimed in the next Business Activity Statement if the cost of the party or gift is tax deductible.

The FBT and income tax implications of Christmas parties and gifts can change depending on the cost and types of FBT elections made.

Accordingly, before you put the finishing touches on staff Christmas festivities, discuss the tax implications and other strategies that should be considered with your usual Mazars adviser or alternatively contact one of our specialists via phone or the form below. 


Brisbane – Nathanael Lee

Melbourne – Amanda Castricum

Sydney – Dean Newman

+61 7 3218 3900

+61 3 9252 0800

+61 2 9922 1166

* mandatory fields

Your personal data is collected by Mazars in Australia, the data controller, in accordance with applicable laws and regulations. Fields marked with an asterisk are required. If any required field is left blank, it will not be possible to process your request. Your personal data is collected for the purpose of processing your request.

You have a right to access, correct and erase your data, and a right to object to or limit the processing of your data. You also have a right to data portability and the right to provide guidance on what happens to your data after your death. Finally, you have the right to lodge a complaint with a supervisory authority and a right not to be the subject of a decision based exclusively on automated processing, including profiling, that produces legal effects concerning you or significantly affects you in a similar way.

Published: 9/12/2020

All rights reserved. This publication in whole or in part may not be reproduced, distributed or used in any manner whatsoever without the express prior and written consent of the Mazars, except for the use of brief quotations in the press, in social media or in another communication tool, as long as Mazars and the source of the publication are duly mentioned. In all cases, Mazars’ intellectual property rights are protected and the Mazars Group shall not be liable for any use of this publication by third parties, either with or without Mazars’ prior authorisation. Also please note that this publication is intended to provide a general summary and should not be relied upon as a substitute for personal advice. Content is accurate as at the date published.