An Australian Business Guide to Christmas Parties

Christmas parties are a great way to thank your staff for their hard work during the year. However it’s important to remember that while your staff may be ‘off the clock’, you’re still responsible for their health and safety. Furthermore, it’s also important to consider any tax implications because some Christmas parties can attract a fringe benefits tax (FBT).

According to the Fair Work Ombudsman’s newsletter Christmas parties: Tips for employers, employers should ensure that they have done everything possible to protect their staff.

Employers have been found to be liable for staff member’s inappropriate statements and conduct that occurs at work-related Christmas celebrations. There have also been incidents that have been held to be sexual harassment or other forms of harassment. If such conduct occurs you should ensure that appropriate action is taken that follows relevant policies and procedures.

When it comes to the Christmas party, employers should consider doing the following:

• Sending a friendly email to staff prior to the party reminding them of their responsibilities at the party. This email should outline what behaviour is acceptable and unacceptable. In particular, this email should refer to any relevant policies and to the need to exercise restraint in the consumption of alcohol.
• Ensuring that any alcohol available is served responsibly.
• Ensuring plenty of food and non-alcoholic drinks are made available.
• Holding the party away from the place of work.
• Ensuring that you have human resource policies in place that address issues that may occur at a Christmas party. These policies should at least cover issues of harassment (including sexual harassment), Occupational Health & Safety and responsible provision of alcohol.
• Making arrangements to help employees get home after the event, such as cab fares or organising a bus.
• Undertaking a risk-assessment of the event. This must identify and then put in place measures to minimise risks.
• Ensuring that all responsible managers are made aware of any substance abuse or alcohol policies.
• Ensure that all responsible managers have the authority to step in should things get out of control.
• Checking that your insurance covers typical Christmas Party activities.
• Ensuring that there is a clear start and finish time to the Christmas party.
• Ensuring that it is made clear that any festivities that continue after the Christmas party are not endorsed by the employer and are on the employees’ own time.

Fringe Benefits Tax (FBT)

Generally, you won’t have to pay FBT if you host the Christmas party on your business premises on a work day, or keep the cost of the party (including gifts provided to employees) to below $300 per person.

The Australian Taxation Office says the cost of providing a Christmas party is income tax deductible only to the extent that it is subject to FBT. Therefore, any costs that are exempt from FBT (that is, exempt minor benefits and exempt property benefits) cannot be claimed as an income tax deduction. The costs of entertaining clients are not subject to FBT and are not income tax deductible.

This information was brought to you by business.gov.au