Bah Humbug. Over 60 per cent of employees would prefer to scrap their work Christmas party and be given the money instead, according to recent market research conducted by First Class Accounts.
The same survey found that over 50 per cent of respondents did not enjoy attending their annual Christmas party with a further 14 percent saying they had never bothered to attend.
Clive Barrett, Executive Chairman of First Class Accounts, said the findings of the research should give business owners and managers pause for thought.
“The lead up to Christmas is a very busy time for many people with lots of social activities in the calendar,” Mr Barrett said. “Social fatigue and financial stress can set in and make the staff Christmas party feel like yet another chore.”
“Many business operators believe you must have a Christmas party for the sake of staff morale, however, as our survey suggests, this is not necessarily the case. Business owners have to ask themselves the question, could the money spent on a Christmas party be put to better use?”
Mr Barrett said that if support for a work Christmas party was low among staff, business operators could consider other alternatives, such as bonuses, gifts or time off.
“However, it’s important to know what can be claimed as a business expense or you could find yourself out of pocket.” Mr Barrett said.
Mr Barret said Christmas parties were classified by the ATO as an entertainment benefit and therefore subject to fringe benefit tax (FBT) but there were other options.
“If you hold your Christmas party at your usual place of work during normal working hours, with no spouses or associates attending, then any food and alcohol is exempt from FBT. However, unfortunately, you still cannot claim a tax deduction or GST credit.
“The twist on this is that if you don’t provide alcohol and serve only nibbles or a light meal then the entire cost is tax deductible. There is no FBT and a GST credit can be claimed on the entire cost.”
According to Mr Barrett, one of the most tax efficient ways to spread Christmas cheer among the workforce was to give staff gift vouchers.
“Cash bonuses are FBT exempt but they must go through payroll and be inclusive of super,” Mr Barrett said.
“Gift vouchers on the other hand are tax deductable, as long as they are under $300, and they give staff a degree of choice over how they spend their money.”
The rules around staff Christmas parties and gift-giving are long and complex and Mr Barrett recommends all small business owners speak to a professional before deciding on how to spread the Christmas cheer this December.
“Despite your good intentions, it’s easy to inadvertently get yourself in trouble if you’re not fully aware of the rules,” Mr Barrett said. “It’s best to play it safe and talk to an expert like a bookkeeper or accountant first.”
First Class Financial Group is Australia’s largest financial support services franchise providing book keeping, finance and insurance www.firstclassaccounts.com.