The holidays bring certain tax liabilities that might not be readily obvious at first glance, especially for many small businesses that have never before considered how Fringe Benefit Tax can apply to events. Some hosted functions a business holds can incur a tax burden. There are two methods used to handle such tax liabilities; either the twelve week register, or the fifty-fifty split. Making use of either changes how certain other tax exemptions will or won’t apply. Consulting an accountant is the best practice before making a decision.
Key Takeaways:
- One method of accounting for a party under FBT is the fifty fifty split, where half of taxable expenses are taxed, and half isn’t.
- The second method is twelve week register, where the expenses are tracked over a three month period and a a proportion of taxable expenditures are subjected to FBT.
- Facility expenses, when the facility is used for entertainment, may also be involved in figuring what is taxable under FBT.
“Holding a Christmas party attended by employees and their associates will be the provision of entertainment for FBT purposes. Often a Christmas party will involve entertainment by way of supplying food and drink and hiring or leasing an entertainment facility.”
Read more: https://insidesmallbusiness.com.au/planning-management/fbt-and-the-festive-season
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