Thinking of rewarding your clients, your staff and their families this festive season? Maybe you’re even thinking of rewarding yourself. After all, you’ve accomplished a lot with your business this year, right?
Well, the Commissioner of Taxation (a.k.a. Ebenezer Scrooge) is determined to take all the fun out of your gatherings and gift giving with a complex web of FBT, income tax and GST provisions.
But fear not. By following these four steps you’ll be able to enjoy your meal and celebratory drinks without any nasty FBT, income tax and GST hangover.
Step 1: Make sure you understand the definition of ‘entertainment’ under the Tax Act.
Step 2: Be ready (and able) to classify your expenditures into one of these categories:
• Meal entertainment
• Other entertainment
• Non-entertainment expenditure
Step 3: Learn how to use the available concessions to minimise FBT on some of your items. (Note: this may affect what you choose to provide as entertainment and gifts.)
Step 4: Create a clear and consistent recordkeeping accounting system that captures this information with respect to staff, their families and your clients. By doing this we can make sure you pay no more FBT, income tax or GST than necessary.
We understand it’s not exactly the easiest set of rules to follow (thanks, Scrooge!) That’s why we’ve created a Quick Reference Guide you can download from our website. And of course, if you’d like more detailed information on your business’ specific circumstances (or just want to broaden your knowledge in general), simply get in touch with your KLM contact.
In the meantime, enjoy your festivities and have a wonderful Christmas and New Year.