In addition, many businesses will be considering what gifts, if any, they will provide to clients, suppliers, employees and possibly their family members.

The following sets out the FBT and income tax consequences.

Gifts which ARE NOT considered to be entertainment

These generally include, for example:

• a Christmas hamper, a bottle of whisky, wine, etc.; and

• gift vouchers, a bottle of perfume, flowers, a pen set, etc.

Briefly, the FBT and tax consequences for these gifts are as follows:

• gifts to employees and family members of less than $300 – no FBT and a tax deduction is allowed;

• gifts to employees and family members of $300 or more – FBT is payable and a tax deduction is allowed; and

• gifts to clients, suppliers, etc. – no FBT and a tax deduction is allowed.

Gifts which ARE considered to be entertainment

These generally include, for example:

• tickets to attend a theatre, live play, sporting event, movie or the like; and

• a holiday airline ticket or admission ticket to an amusement centre.

Briefly, the general FBT and income tax consequences for these gifts are as follows:

• gifts to employees and family members – FBT is payable and a tax deduction is allowed (except where the minor benefit exemption applies); and

• gifts to clients, suppliers, etc. – no FBT and no tax deduction.

While we have tried to simplify the rules, we understand that it can get complicated, so give us a call if you would like a hand.