No matter how you look at it, the cost of an employee or their associate (spouse) attending a Christmas party will invariably always be a form of “entertainment”.
Normally, Fringe Benefits Tax (FBT) is payable by the employer on the value of the entertainment provided. However there is an exception. Provided, the benefit is less than $300 (incl. GST) and is “infrequent” or “irregular” and not a reward for services, then the benefit can be treated as an exempt minor benefit.
On the flip side, because these entertainment expenses are not subject to FBT, they are also not tax deductible. That’s right – unless you are spending more than $300 a head, it means that expenses incurred in providing a Christmas party are not generally deductible. And you cant claim any GST either!
Here is a table to summarise: