Staff Christmas Parties and Gifts: How to Celebrate Without an FBT Hangover
November 6, 2026
December is when businesses say thank you to their teams, and it’s also when a well-meaning celebration can turn into an unexpected fringe benefits tax (FBT) bill. The good news is that with a bit of planning, most small businesses can host a great end-of-year party and hand out gifts without paying any FBT at all. Here’s how the rules work in plain English.
The number to remember: $300 per person
Most of the Christmas FBT rules hang off the minor benefits exemption. A benefit provided to an employee (or their partner) that costs less than $300 including GST, and is provided infrequently and irregularly, is generally exempt from FBT.
Two things to know about the $300 limit:
- It’s applied per person, per benefit, not per event total. A party costing $250 per head is under the limit even if the total bill is $10,000.
- The party and a gift are separate benefits. A $200-per-head party and a $150 hamper can each be exempt, even though together they exceed $300.
Party at your workplace on a work day
If you hold the party on your business premises on a working day and only current employees attend, the food and drink is exempt from FBT regardless of cost. Think catered lunch or afternoon drinks in the office or workshop.
The trade-off: because it’s exempt entertainment, you can’t claim an income tax deduction or GST credits for the cost.
Party at a restaurant or venue
Once the celebration moves off-site, the cost per head becomes the deciding factor:
- Under $300 per head: generally exempt as a minor benefit. No FBT, but also no tax deduction and no GST credits.
- $300 or more per head: FBT is payable on the cost. The upside is that the cost becomes tax deductible and you can claim the GST credits, but the FBT will usually outweigh the benefit.
For most small businesses, keeping the per-head cost under $300 is the simplest way to stay clear of FBT.
Partners, clients and other guests
Employees’ partners and family are treated differently from employees. Even at an on-premises party, the cost of feeding and entertaining partners isn’t covered by the workplace exemption, so it needs to fall under the $300 minor benefit limit to stay FBT-free.
Clients and suppliers don’t attract FBT at all, because they aren’t your employees. However, the cost of entertaining them is not tax deductible and you can’t claim the GST credits.
Staff gifts: hampers versus tickets
How a gift is treated depends on whether the ATO considers it “entertainment”:
- Non-entertainment gifts such as a hamper, bottle of wine, flowers or a gift voucher: exempt from FBT if under $300, and tax deductible with GST credits claimable. This is usually the most tax-effective way to say thank you.
- Entertainment gifts such as concert or sporting tickets, a dinner voucher or a weekend away: exempt from FBT if under $300, but not tax deductible and no GST credits.
Gifts to clients follow a similar pattern: a hamper or bottle of wine is generally deductible, while tickets or other entertainment are not.
Getting everyone home safely
Taxi travel for an employee that starts or ends at their place of work is exempt from FBT, so paying for cabs home from an office party is generally fine. Rideshare and travel from an off-site venue can be treated differently, so check with us if you’re planning to cover transport for the team.
Quick reference
| Scenario | FBT | Tax deduction | GST credits |
|---|---|---|---|
| Party at work, on a work day, employees only | Exempt | No | No |
| Off-site party, under $300 per head | Exempt | No | No |
| Off-site party, $300 or more per head | Payable | Yes | Yes |
| Clients attending | No FBT | No | No |
| Hamper, wine or voucher under $300 | Exempt | Yes | Yes |
| Tickets or experiences under $300 | Exempt | No | No |
This table assumes you use the actual method for meal entertainment. If your business has elected the 50/50 split method, the outcome can differ.
Practical tips before you book
- Do the per-head maths early. Divide the total cost (food, drinks, venue hire, entertainment) by everyone attending, including partners.
- Keep the invoice and a headcount. If the ATO ever asks, you’ll want to show how you arrived at your per-head cost.
- Separate gifts from the party. Keep gift receipts on their own so it’s clear each benefit is under $300.
- Remember the FBT year. This year’s Christmas party falls in the FBT year ending 31 March 2027, so anything taxable will show up in that FBT return.
Need a hand?
If you’re not sure how your end-of-year celebration or staff gifts will be treated, talk to us before you book. Get in touch via our contact page or email info@brickroadaccounting.com.au.
This article is general information only and doesn’t take your circumstances into account. Please speak to us before acting on it.
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