Christmas parties and gifts without the FBT bill

The end of the year is a great time to thank your team and your clients. With a little planning, you can do it without fringe benefits tax (FBT) joining the celebrations.

Where you hold the party matters

At your workplace, on a working day, for staff only. There’s no FBT on the food and drink for current employees, however much it costs.

At a restaurant or venue, or if partners are invited. There’s generally no FBT if the cost is less than $300 per person and it would be unreasonable to treat it as a fringe benefit, for example because it’s a one-off rather than a regular perk. This is called the minor benefit exemption. The $300 is worked out per person, so a partner’s share is looked at separately from the employee’s.

Clients at the party. There’s no FBT on the share that relates to clients.

The catch: deductions and GST

When a Christmas party is FBT-free, you generally can’t claim a tax deduction for it or claim back the GST. Client entertainment works the same way: no FBT, but no deduction or GST credit either.

That’s usually still the better result for a small business, but it’s worth knowing when you set the budget. If the party goes over $300 a head, FBT may apply, and then the cost generally becomes deductible and you can usually claim the GST.

Gifts for your team

A Christmas gift to an employee can also be FBT-free if it’s worth less than $300 and it’s a one-off. It’s looked at separately from the party, so a modest party and a modest gift can both qualify.

Gifts that aren’t entertainment, such as a hamper, a bottle of wine or a gift card, are generally tax deductible. Entertainment gifts, such as concert or footy tickets, are treated differently.

Gifts for clients

A gift to a client that’s made for business reasons, such as a hamper or a bottle of wine to say thanks, is generally tax deductible. Tickets to an event, a round of golf or a night out count as entertainment, so they generally aren’t deductible.

A few simple habits

• Keep receipts and a list of who attended.
• Work out the cost per person, including drinks and transport.
• Note which gifts went to staff and which went to clients.

Planning something bigger?

If you’re thinking about an off-site event, inviting partners or giving more generous gifts, get in touch with us and we’ll run the numbers before you book.

Contact our team today or call us on 03 8910 8940.

Mike Carter
Managing Director
BLACKFOX Financial Group

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This article contains general information only. It doesn’t take your personal circumstances into account and isn’t personal financial advice. Tax rules change, and this information is current as at October 2026. Please speak to us before acting on it.