FBT

FBT and the Festive Season: Preparing for Christmas 2025

Hosting a Christmas party or gifting your staff this year? Be careful — fringe benefits tax (FBT) might apply.

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Christmas 2025 is coming up fast. If you’re organising celebrations, gifts, or bonuses for your small business, make sure your generosity doesn’t land you with a surprise tax bill.

Here’s what to watch for with FBT this festive season, and how to plan ahead so your celebrations stay cost-effective and compliant.

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When Does FBT Apply to a Christmas Party?

Whether or not FBT applies to your Christmas party depends on where it’s held, who’s invited, and how much it costs.

If food and drink are provided only to current employees, there’s no FBT — even if alcohol is served. This is covered under the property exemption.

If you host the party off-site or invite family, FBT usually applies — unless you keep the cost under $300 per person. This is the minor benefits exemption, and it only applies if the benefit is considered “unreasonable” to tax.

No FBT applies to entertainment provided to clients. However, you also can’t claim a tax deduction or GST credits for client-related food, drink or travel.

Are Christmas Gifts for Employees Taxable?

It depends on what you give and how much it’s worth.

Non-entertainment gifts (like gift cards, hampers, or skincare):
Gifts under $300 (including GST) per employee are FBT-free, and you can usually claim a tax deduction and GST credits.
Go over $300 and FBT likely kicks in.
Entertainment gifts (like concert tickets or spa vouchers):
Entertainment gifts like tickets or spa vouchers are classed as recreation. Even under $300, you usually miss out on deductions and GST credits; however, the gift may be exempt from FBT if the minor benefits rule applies.

Tip: Track who got what, the value, and the type of gift. Good records make tax time easier and help you get the right treatment.

What About End-of-Year Bonuses?

Bonuses for employees and directors always attract PAYG withholding and superannuation, even as a one-off.

The ATO has a specific tax table for bonuses and similar payments. The amount you withhold depends on:

The employee’s regular pay
Whether the bonus relates to a single or multiple pay periods
If it’s a one-off payment with no fixed period, it’s treated as covering 12 months

Super is also payable on bonuses — unless it’s clearly exempt, like backpay for unused leave.

FBT Doesn’t Have to Ruin the Holiday Spirit

Avoiding a big tax bill at Christmas comes down to knowing the rules and planning ahead. Get your celebration and gift strategy sorted early to keep your team happy and your tax sorted.

Simplify keeps your bookkeeping and BAS up to date, so you’re ready for any FBT reporting each festive season.

We Wish You a Merry, Cost-Effective Christmas

Now you know when FBT applies to Christmas parties, gifts, and bonuses — and how the $300 minor benefit exemption can help reduce your tax bill. With PAYG, GST, and deductions all in the mix, it’s worth getting ahead of the rules.

Planning early means fewer surprises. By spotting the risks now, you can avoid admin headaches and keep your holiday season spending under control.

Not sure how the rules fit your business, or need help sorting out costs? Get advice from people who know FBT inside out.

Simplify Bookkeeping & BAS supports small and family businesses across Australia with FBT, Business Activity Statements (BAS), and compliance.

Talk to us today and take the stress out of festive season planning.

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