Planning on throwing a huge Christmas bash for your employees? If so, we have good news for you: you can write it off as a business expense and get a tax break! If you didn’t already have a good reason to plan a big event, you do now!
You’ll find that most holiday parties qualify for a 100% deduction from your Australian taxes. Whether it’s a Christmas party, a spring picnic, or big summer events, you’ll find that these things can all be deducted from your taxes.
There are three basic conditions that need to be met in order for it to qualify for the 100% tax deduction:
- The party is “primarily” for your employees. What does this mean? In your company, there is a “tainted group” of people, essentially anyone who earns more than $110,000 per year, owns more than 10% shares, or is the family member of someone who owns 10% shares in the company. As long as more than 50% of the people attending the party are “regular employees” and not part of this “tainted group”, you can write off the expense as tax deductible. This is one reason many employers invite the families of their employees, as they are also tax deductible
- You have the right reason for throwing the party. The expense will need to be one that is “appropriate and helpful” for the success of your company in order for it to be written off as tax deductible. Considering that the party is being thrown to boost the morale of your employees, it is a legitimate deduction. However, be careful that you don’t turn too many events into tax write-offs using this excuse, as it can bring all of your events into question.
- It’s fully documented. From the cost of renting the Melbourne Christmas party venue to the price of food and the money you spend on entertainment, you need to document every expense. It’s the same as with any other expenses you deduct from your taxes, so you need to have written proof that you spent the money on your party.
Of course, you will need to hold the party on a regular working day and hold them on your premises if they are to be deducted. Also, the food and drink that you provide will need to be consumed by your employees (and their families) for them to be tax deductible. You can only spend up to $300.00 per employee. Clients attending the party will not qualify for tax write-off status.
Complicated stuff, right? Of course it is, which is why accountants and tax experts earn such a great living! The good news for you is that your party can be tax deductible, provided you stick within the limits outlined above.
You’ve got accountants to help you handle the tax side of things, so let Red Scooter handle the party planning for your office Christmas soiree! We’ll make sure that you get the biggest bang for your buck, and you’ll end up with a show-stopping party that will be fully tax deductible!