Happy friends enjoying on terrace. Smiling man and women are celebrating together during sunset. They are wearing casuals in party

FBT treatment of work Christmas parties and gifts

Fringe Benefits Tax — What business owners need to know this Christmas

As the festive season approaches, you are likely planning your end-of-year functions and perhaps even thinking about Christmas gifts for valued customers and employees for another year.

During this period, it’s important to understand and be mindful of the implications of Fringe Benefits Tax on gifts and parties, to ensure that your generosity doesn’t cause unwelcome tax consequences for your business.

To help, we have set out the following guidelines to assist you:

Fringe Benefits Tax at Christmas

Christmas Parties

If your business lodges an FBT return calculating entertainment using the 50/50 method, then 50% of the cost of your Christmas party will be subject to FBT.

If you do not lodge an FBT return using the 50/50 method then the cost of your Christmas party will be exempt from FBT provided one of the following applies:

  • The Christmas party is held on business premises on a working day for current employees only, OR
  • The Christmas party costs under $300 per head.

If your business entertains your employees frequently (more than 10 times per year) then your Christmas party may be subject to FBT regardless of the cost, so please discuss this with your Allan Hall advisor first.


  1. A law firm holds its Christmas party for employees only on a Friday afternoon in the office garden complete with marquee, live band, premium alcohol and a delicious banquet cooked by a celebrity chef. The cost comes to $490 per head. This will be exempt from FBT.
  1. An electrical company holds its Christmas party at a local restaurant with food, drink and entertainment. Ten employees and their spouses are invited making a total of 20 people. The total cost comes to $5,000. As this equates to $250 per head it will be exempt from FBT.

Customer Gifts

Gifts to customers are tax deductible and not subject to Fringe Benefits Tax, provided they are a genuine gift e.g. a Christmas hamper or a bottle of wine.  If you choose to take a customer out for a Christmas drink instead, your portion of this may be subject to Fringe Benefits Tax.

Staff Gifts

Gifts are a great way to show your employees how appreciative you are of their efforts whilst still attracting a tax deduction for your business. However, it’s important to understand that staff gifts over $300 will be subject to Fringe Benefits Tax.

Further, staff gifts under $300 should be eligible for the minor benefits exemption from Fringe Benefits Tax, but if they are recreational gifts (such as concert, cinema or sports tickets) then no income tax deduction or GST can be claimed.

Understanding the intricacies of Fringe Benefits Tax and the implications of FBT on your Christmas entertaining — gifts and parties — can be challenging. Many of our team offer skilled and highly experienced advice in all aspects of Fringe Benefits Tax, so please contact your Allan Hall Advisor for specific assistance before planning your Christmas functions and/or staff and customer gifts.

NOTE: If your business is a tax-exempt body or charity then a separate set of rules applies so please consult your Allan Hall Advisor.


taxation & accounting

Business income: it’s not just cash

Clothing, jewellery, gaming products, flights and crypto assets are just some of the things you might have to account for in your tax return as part of your business income.

If you received these or any other non-cash benefits instead of money for your goods or services, or as a tip or gift – you must record them as income at their market value.

This means you record the cash price that you would normally have to pay for those goods or services.

You may be able to reduce the assessable amount of a non-cash benefit you’ve received, by the amount you would have been able to claim as a deduction if you had purchased the item to be used in carrying on your business.

It’s important to report your regular forms of income

Such as:

  • cash and digital payments
  • vouchers or coupons
  • business investments
  • online and overseas business activities
  • services you provide using your personal effort and skills (personal services income)
  • the sharing economy, such as ride-sourcing
  • assessable government grants and payments
  • the value of trading stock you take for your own use
  • payments from insurance claims.

There are some payments that aren’t assessable income, so you don’t need to include them on your return, such as:

  • non-assessable non-exempt (NANE) government grants
  • bona fide gifts or inheritance
  • GST you’ve collected
  • money you’ve borrowed or contributed as the business owner.

Always keep accurate and complete records to prove the income you report and the expenses you claim as deductions.

Remember, registered tax professionals like Allan Hall in Brookvale can help and advise on your tax.


Parliament House

Support for Australian small business

The Government has introduced the Treasury Laws Amendment (Support for Small Business and Charities and Other Measures) Bill 2023 (the Bill) into Parliament.

The Bill delivers measures announced in the 2022‑23 Budget to ease pressure and boost resilience for small businesses.

Schedule 1 to the Bill will implement a $20,000 instant asset write‑off for one year, as announced in the 2023‑24 Budget, to improve cash flow and reduce compliance costs for small businesses.

Small businesses with aggregated annual turnover of less than $10 million will be able to immediately deduct eligible assets costing less than $20,000, from 1 July 2023 until 30 June 2024.

The $20,000 threshold will apply on a per asset basis, so small businesses can instantly write off multiple assets.

This is targeted, responsible support, to help Australia’s small businesses continue to grow.

Schedule 2 to the Bill will introduce the Small Business Energy Incentive, a 2023‑24 Budget measure designed to help small and medium businesses electrify and save on their energy bills.

Up to 3.8 million small and medium businesses with aggregated annual turnover of less than $50 million will have access to a bonus 20 per cent deduction for eligible assets supporting electrification and more efficient use of energy.  

The new tax incentive applies from 1 July 2023 until 30 June 2024. Up to $100,000 of total expenditure will be eligible for the incentive, with the maximum bonus tax deduction being $20,000.

The new Small Business Energy Incentive builds on the Albanese Government’s measures to help small businesses become more energy efficient and ease pressure on their energy bills.

Small businesses are the engine room of Australia’s economy, which is why these new measures are so critical.



NSW State Budget 2023-24

The 2023-24 NSW State Budget has a strong focus on tightening tax compliance, as well as changes to a number of exemptions and duties:

  • Funding Revenue NSW to Target Tax Compliance
  • Land Tax – Closing the loophole for Principal Place of Residence Exemption
  • Landholder Duty – changes to threshold for acquiring a “significant interest” in a private trust
  • Fixed and nominal duty amounts increased

This year’s NSW State Budget does not explicitly mention specific measures targeted at small businesses. However, it does mention some broader economic and infrastructure initiatives that could indirectly benefit small businesses. These include:

  1. Toll Reform: Introducing a two-year toll cap and streamlining motorway pricing
  2. Infrastructure and Transport: Investments in infrastructure projects, including road upgrades and improved public transportation
  3. Energy Relief and Reform: Addressing high energy costs through rebates and energy market reforms
  4. Disaster Relief: Funds allocated for natural disaster support and recovery programs.

Measures for First Home Buyers

The State Budget includes an expansion to the First Home Buyers (FHBs) Assistance Scheme to support FHBs with a stamp duty exemption for purchases up to $800,000 and a concession for purchases between $800,000 and $1 million.

Five out of every six first home buyers will pay no stamp duty, or a concessional rate after the Government expanded stamp duty exemptions and concessions from 1 July 2023. According to preliminary figures, more than 1,000 FHBs purchasing in the $650,000 to $800,000 range have availed themselves of the full exemption from stamp duty in July under the scheme.

The measures announced in the 2023-24 NSW State Budget can have implications for the business environment in New South Wales, including those for small businesses and are outlined in the Treasury and Revenue Legislation Amendment Bill 2023 expected to be implemented from 1 February 2024, once the Bill has been passed by Parliament.



The 120% technology and skills ‘boost’ deduction

The legislation granting small and medium businesses (SMBs) the opportunity to claim a 120% tax deduction for technology expenses, skills training and training costs has finally passed Parliament, nearly a year after the announcement in the 2022-23 Federal Budget.

However, there are a few timing complexities involved. To benefit from the technology investment boost, you needed to have purchased and installed the technology by 30 June 2023, which was just seven days after the legislation was passed.

Key points

  • Under both the technology and Skills and Training Boost, eligible expenses will be available for the 120% deduction if they were incurred between 29 March 2022 and 30 June 2024
  • The bonus deduction for the technology boost is capped at 20% of the eligible expenditure, up to a limit of $20,000 ($100,000 of eligible expenditure)
  • There is no limit for the skills and training boost.

Who is eligible for the boosts?

Small business entities (including individual sole traders, partnerships, companies or trading trusts) with an aggregated annual turnover of less than $50 million can access the 120% skills and training boost, as well as the technology boost. Aggregated turnover includes the turnover of your business, affiliates and connected entities.

The technology investment Boost

Expenses that may qualify for the technology boost include:

  • Digital enabling items like computer hardware, telecommunications equipment, software, internet costs, computer network systems and services that facilitate their usage.
  • Digital media and marketing expenses including audio and visual content that can be accessed, stored or viewed on digital devices, as well as web page design.
  • E-commerce goods or services that support digitally ordered or platform-enabled online transactions, portable payment devices, digital inventory management, subscriptions to cloud-based services and advice on digital operations or digitisation such as guidance on digital tools for business continuity and growth.
  • Cybersecurity systems, backup management and monitoring services.

The technology must be primarily or substantially used for a business’s digital operations or digitisation. There must be a direct connection to how the business generates income, particularly through its digital operations.

There are several costs that the technology boost does not cover, such as expenses related to staff employment, capital raising, construction of business premises and the cost of goods and services sold by the business. The boost does not apply to:

  • Assets purchased and sold within the relevant period (on or before 30 June 2023)
  • Capital works costs, including improvements to business premises
  • Financing costs like interest expenses
  • Salary or wage costs
  • Training or education costs, meaning that training staff on software or technology does not qualify (refer to Skills and Training Boost below)
  • Trading stock or the cost of trading stock.

The Skills and Training Boost

The Skills and Training Boost is a program that provides SMBs with a 120% tax deduction for external training courses offered to their employees. The primary objective of this boost is to facilitate the growth of SMBs’ workforce by enabling them to hire and upskill less-experienced employees through external training. This initiative aims to enhance their skills and increase overall productivity.

Please note that sole traders, partners in a partnership, independent contractors and other non-employees are not eligible for the boost as it is specifically designed for employees. Similarly, associates such as spouses or partners, as well as trustees of a trust, are not qualified to participate.

To ensure compliance, there are a few rules to be aware of:

  • Registration for the training course must have occurred between 7:30 PM (AEST) on 29 March 2022 and 30 June 2024. If an employee is already enrolled in an eligible training course, enrolments in subsequent courses or classes after 29 March 2022 are considered eligible.
  • The training must be deductible to your business according to ordinary rules, meaning it should be directly related to how your business generates income.
  • The training needs to be provided by a registered training provider who charges your business (either directly or indirectly) for the training. (Please refer to the section on “What organisations can provide training for the boost?” below)
  • The training must be intended for employees of your business and should be delivered either in-person within Australia or through online platforms.
  • The training provider cannot be your business or an associate of your business.

Training expenditure can include costs associated with the training, such as resources or equipment necessary for the course, provided that the training provider charges your business for these expenses.

What organisations can provide training for the boost?

Please note that not all courses offered by training companies will qualify for the boost. Only courses offered by registered training providers within their registration will be eligible. Typically, these providers offer vocational training to acquire a trade or courses that contribute to a formal qualification, rather than purely professional development.

Qualifying training providers will be registered by:

While some desired training may not be delivered by registered training organisations, there is still a wide range of options available. Short courses offered by universities or flexible courses designed for upskilling, rather than obtaining a degree qualification, can still be explored, especially if they align with the development pathway identified through recent performance reviews for your staff.


eofy 30 june

End of Temporary Full Expensing 30 June

Just under a month to go before the Temporary Full Expensing Measures finish up

The temporary full expensing rules allow eligible businesses to claim a tax deduction for the full cost of eligible depreciable assets (except for motor vehicles which are subject to the current car cost limit of $64,741).

Key changes

  • The temporary full expensing measures that have allowed small and medium businesses to write off the full cost of new assets, with no limit, (other than the cost limit on motor vehicles) is scheduled to end on 1 July 2023
  • Any business considering purchasing assets and utilising these measures prior to this date should plan now — it is important to note that to receive the deduction, an asset must be installed and ready for use.

To claim the deduction in full, in the year the asset is acquired, the asset must be installed and ready for use and must be used for a taxable purpose.

Temporary full expensing supports businesses and encourages investment, as eligible businesses can claim an immediate deduction for the business portion of the cost of an asset in the year it is first used or installed ready for use for a taxable purpose.

From 1/7/2023 to 30/6/2024, businesses with turnover up to $10M will be entitled to claim an immediate tax deduction for assets costing $20,000 or less. Assets purchased above this amount will not get an immediate deduction.


Compliance cogs

Federal Budget ATO compliance crackdown

Increased number of reviews

The importance of audit insurance in the wake of the Federal Budget – did you know that you can get insurance that covers the costs of professional fees incurred to respond to an ATO audit?

The recently announced Federal Budget 2023 has unveiled significant funding increases ($588M) in the government’s stance towards tax compliance, particularly through the Australian Taxation Office (ATO). GST compliance,and Personal income tax deductions have been specifically named by the government as areas of risk.

If you are in business, audit insurance is an often-overlooked component of business insurance, however in an environment where compliance scrutiny is intensifying, having audit insurance serves as a proactive measure to safeguard one’s financial interests.

Extended audit scope

Even if you are not in business, you may be a high-income earner, or have investment properties, the scope for an ATO review is much greater than in the past. You should be aware of safeguarding your financial well-being and know that you are not immune to tax compliance scrutiny (and review).

As complexities within our tax system increase, the time and expertise required to respond effectively to ATO reviews also escalate, resulting in more costs to simply respond to the review, not including ongoing management of the ‘case’ to completion. The potential cost of such services is increasing, with accountants needing to spend many hours (at hourly rates) to address detailed audit correspondence and liaise with clients.

Audit insurance offers coverage for professional fees incurred in responding to ATO and other government department reviews.

Investing in audit insurance ensures that individuals are also financially prepared to handle these reviews without incurring a significant cost burden.

With a substantial allocation of government funding towards tax compliance, the ATO aims to enhance its ability to address emerging risks and generate additional revenue. In light of these developments, it becomes increasingly crucial for businesses and many other taxpayers to consider the importance of audit insurance as a protective measure.


working from home

WFH changes and what the ATO is looking for

Calculation and record-keeping requirements of your working from home (WFH) deductions may have changed for the 2022-23 income year.

The 80c per hour temporary shortcut method ended on 30 June 2022.

For the 2022-23 income year you may be able to use either the revised fixed rate method or the actual cost method to determine your working from home deductions.

Whilst the actual cost method remains unchanged, the fixed rate method has increased from 52c per hour to 67c per hour.  The revised fixed rate method incorporates the following usage expenses:

  • electricity
  • gas
  • stationery
  • computer consumables, such as printer ink
  • internet
  • phone.

It is not possible to claim an additional deduction for expenses that are already covered by the revised fixed rate method. However, you may be eligible to claim a separate deduction for the depreciation of assets, including items like laptops, mobile phones, and office furniture.

To claim your working from home deductions using the revised fixed rate method, you must be able to provide both:

  • A representative record of the total number of hours worked from home during the period from 1 July 2022 to 28 February 2023.
  • A record of the total number of actual hours worked from home for the period 1 March 2023 to 30 June 2023.

If you choose not to use the fixed rate method, you may be able to use the actual cost method. Please contact your Allan Hall Accountant to assist you in getting the best tax deduction for your personal circumstances.  

Regardless of the method you choose, it is important to maintain accurate and complete records for at least 5 years to support your claims for home-based business expenses.