When it comes to rewarding your team, putting on a social event, or offering workplace perks, many businesses find themselves asking: Is this tax-deductible? or Will this trigger Fringe Benefits Tax (FBT)?
The ATO has specific rules around entertainment-related fringe benefits, and understanding them can help you avoid surprise costs or compliance issues. Let’s take a look at some common workplace scenarios and what to be aware of when it comes to work, tax and entertainment.
Christmas Parties & Gifts
As the holiday season rolls around, many businesses celebrate with staff parties, client gifts, or bonuses. These gestures are generous but they can also come with tax implications.
The key thing to understand is that most Christmas party expenses are considered entertainment. Depending on where the party is held, how much it costs per person, and who attends (staff, spouses, clients), you might trigger FBT.
There are a few ways to reduce or avoid FBT, such as staying under the $300 minor benefits threshold, keeping the event infrequent, and holding it on business premises during work hours.
We cover this in more detail in our Christmas Party Tax Guide here.
Gym Memberships & Wellness Perks
Providing gym memberships or wellness packages for staff sounds like a great idea but unfortunately, it’s often considered a recreational fringe benefit.
Even if the intention is workplace wellbeing, the ATO generally treats ongoing memberships as taxable benefits unless they’re under the minor benefit threshold (which is rare for annual memberships).
While you might still claim the cost as a business expense, FBT could apply so check with your accountant before signing the contract.
Team Holidays, Retreats & Golf Days
Shouting your staff a weekend retreat, a golf day, or a staff getaway? These kinds of events are almost always treated as entertainment.
Even if they include some business elements (like training sessions or planning days), the recreational aspects (accommodation, meals, activities) are typically caught under FBT rules.
To stay compliant:
- Keep detailed records of business vs entertainment components
- Separate staff costs from guest costs
- Be cautious about claiming the full amount as a deduction
It’s still possible to enjoy these events, just budget for potential FBT or get advice upfront.
Afternoon Teas and Light Refreshments
Shouting the team afternoon tea, coffees or a birthday cake? These may not count as entertainment unless there’s alcohol involved or it becomes a social gathering.
According to the ATO, simple refreshments served on business premises during work hours can be exempt from FBT. But if it’s offsite, includes guests, or becomes more like a party you’re in FBT territory.
Rule of thumb: snacks = generally safe. Sit-down meals = check before you claim.
Seminars, Workshops & Professional Development
Training sessions and seminars are usually not classed as entertainment especially if the main purpose is work-related.
Costs such as venue hire, materials, speaker fees and non-alcoholic refreshments are typically deductible and FBT-free. But if you include social components (dinner, drinks, team-building activities), the entertainment portion may attract FBT.
Keep it clean and focused on professional development if you want to stay on the safe side.
When In Doubt, Ask Your Accountant
The rules around fringe benefits and entertainment aren’t always black and white. The ATO provides plenty of guidance, but your specific circumstances matter including who attends, where it’s held, how often it happens, and how much you spend.
If you’re unsure, speak to the team at Schofields Accountants. We’ll help you understand:
- What you can and can’t claim
- What’s subject to FBT
- How to reduce your risk and your tax bill
Need help navigating the rules around staff perks and entertainment expenses? Get in touch with our friendly team at Schofields Accountants today.
