Insights · Tax · 27 October 2026

Christmas parties, staff gifts and FBT

Thanking the team at the end of the year shouldn’t create a tax bill in May. The ATO’s rules turn on four things: where the event is, who comes, what it costs per head and what kind of gift it is.

The party

On your premises, on a working day, current staff only: no FBT on the food and drink, whatever the cost per head.
Off your premises, or partners attend: no FBT if it is a minor benefit: under $300 per person and it would be unreasonable to treat it as a fringe benefit (for example, it is not frequent or regular).
Clients: there is no FBT on benefits to clients.
Taxi home: taxi travel directly to or from the workplace has its own FBT exemption.

The catch: deductions and GST credits

If the party is exempt from FBT, you generally can’t claim an income tax deduction or GST credits for it. In the ATO’s own example of an on-premises lunch with staff, partners and clients, the employer pays no FBT but also claims no deduction or GST credits. Exempt does not mean it costs the business nothing; it means the cost sits after tax.

Gifts

A gift to an employee is generally exempt from FBT if it is under $300 per person and qualifies as a minor benefit. The $300 test applies to each benefit separately, but the ATO also looks at how often similar benefits are given and their total value. Keep a note of what was given, to whom and what it cost.

A simple checklist before you book

Where is it, and is it a working day?
Who is invited: staff, partners, clients?
Cost per head, including drinks and transport.
Any gifts, and their value per person.
Keep the invoice and a headcount.

Planning the rest of the break? See the Christmas shutdown cash flow plan and download the checklist.

Quick answers

Is a Christmas party on business premises subject to FBT?

For a commercial business, food and drink provided to current employees on your premises on a working day is exempt from FBT, according to the ATO.

What is the $300 minor benefit rule?

A benefit with a notional taxable value under $300 can be exempt if it would also be unreasonable to treat it as a fringe benefit, considering things like how often it is provided.

Can I claim the Christmas party as a tax deduction?

If the party is exempt from FBT, you generally can’t claim an income tax deduction or GST credits for it.

Download · PDFThe Christmas and January cash flow checklist: 7 sections, one page each side, PRM branded. Print it and tick it off.

Get the checklist

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Sources

General information only. This doesn’t take your circumstances into account and isn’t tax, financial or legal advice. Talk to your accountant or registered tax agent before acting. PRM is not a registered tax agent; tax agent services are provided by Australian Tax & Super Pty Ltd (TPB 25291395).