Accounting For Christmas

Small Business

Here we are again – that wonderful time of the year! It seems to come around quickly (yet again), and as we get closer to Christmas we starting to think about those end of year celebrations, and recapping all of the good things that have happened throughout the year.

For many business owners – and we’re no different – it’s time to do a little something to say thank you to their hard working staff. You’ve pulled together as a team and created your successes, so now let’s celebrate!

Here are a few tips to make sure you all get the most out of the season:

Throw an amazing Christmas party!

Everyone loves a Christmas party, and it’s a great way to let your collective hair down. There’s been some misinformation about staff parties and tax deductions, but in the words of Public Enemy – Don’t believe the hype!

Given the ATO’s increased scrutiny on tax deductible activities, it’s important to get it right, and not get caught out. Location, cost, GST, alcohol and other factors can impact the tax situation. Long story short, don’t try to simply claim a party as a tax deduction, and if in doubt talk to us!

One thing to bear in mind is that if you spend over a certain amount, you may actually attract more tax! Under the Fringe Benefits Tax framework, spending over $300 per staff member on a party will end up costing you even more.

Even better, if you’re feeling super generous, any gifts you give out are treated separately, and keeping them under $300 will avoid the FBT too. Giving out non-entertainment gifts such as hampers or gift cards is the best way to go as these gifts will be tax deductible.

So if you’re worried about costs, then factor this into your decision. But if you just want to have a blast and you can afford it then go for it – you deserve it!

Play Santa and give out gifts

This is a great time of year, and who doesn’t appreciate receiving (and giving) gifts? While it might be a bit hot to get all dressed up in a big red suit, you can still bring joy to your team.

Being thoughtful and matching gifts to individuals shows you really care. These days there are some great gift packs and flexible hamper-style presents that you can really get creative with. Other personalised experience gifting businesses will let you really tailor what you give to your staff.

And as long as you keep the gifts under $300, and give out non-entertainment gifts like the hampers and gift cards mentioned above, then you’ll be keeping under the minor benefits exemption threshold. Happy days!

Holiday time!

Many businesses enforce a closure over the Christmas period and this is great for a number of reasons. People usually appreciate having time together with their family, and taking some downtime to enjoy life outside of work.

As a business owner it gives you a great opportunity to unwind, switch off and/or reflect on the year that was. Coming back to work a bit ahead of the staff also lets you do some planning with a clear head space away from all the daily distractions.

Another thing to think about is staff accruing leave – if you keep on top of the leave situation then you can avoid staff building up a large bank of leave. This will help prevent staff asking for a huge holiday in the middle of the year, and also avoid having a large payout in the case that a staff member moves on.

Christmas bonus

Cash is king as they say! Aside from parties and gifts, people always enjoy a bit of bonus spending cash coming into Christmas. Before you start giving out bonuses, make sure that you’re in a good position!

Over a Christmas break you’ll probably have greatly reduced revenue, but increased staff costs due to leave loading. So make sure that you can afford the bonuses from a cashflow point of view as well as profitability. And remember to treat any bonuses like any other wages payment – super and PAYGW still apply.

One way to help avoid a cashflow problem is to use the ATO’s BAS extension for the December quarter. This generous extension pushes the due date back to February, helping reduce the cashflow pressure over Christmas.

But don’t forget that there’s no March extension – so you’ll have 2 BAS payments closer together!

Enjoy the break – from our family to yours!

Regardless of how you decide to reward your team, or manage your time over the Christmas period, we hope you have a wonderful holiday experience.

Here at The Garis Group we’ll be taking 2 weeks off and I know that we’re all looking forward to it! We’ve had a rewarding and productive year and have really enjoyed celebrating our clients’ successes through the year.

So have a safe and prosperous Christmas time, and onward and upward for next year!

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