The holiday season is meant to be the most uplifting part of the year — team celebrations, end-of-year recognition, thank-you gifts, and well-deserved downtime.
But for finance teams, it’s also the season where FBT gets complicated, fast.
Events overlap. Gifts are purchased on the fly. Approvals happen quickly. Receipts arrive late. Suddenly, you’re left trying to work out which expenses are entertainment, which qualify under minor benefits, which relate to clients, and which fall squarely into the ATO’s “FBT applies” bucket.
The good news? With a clearer understanding of why holiday expenses attract Fringe Benefits Tax and how to classify them correctly, the whole process becomes far more manageable.
Holiday expenses are tricky because they rarely fit into neat categories. A single Christmas party can involve:
Every one of those elements has different FBT implications.
The ATO doesn’t just look at what was purchased — it looks at the context. That’s why two identical-looking expenses (like a $200 voucher and a $200 concert ticket) can lead to completely different outcomes.
FBT decisions essentially come down to one simple formula:
Recipient + Type + Value = FBT outcome
(Staff + entertainment + >$300 = taxable)
Most FBT scenarios fall neatly into this three-step logic.
The biggest source of confusion in Holiday FBT is understanding what counts as entertainment.
The ATO defines entertainment broadly — anything involving social enjoyment, fun, or recreation. This includes meals, alcohol, events, shows, activities, and experiences.
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Entertainment examples: |
Non-entertainment examples: |
These almost always attract FBT when provided to employees — even if under $300. |
These typically fall under the minor benefit exemption if under $300 and infrequent. |
Teams assume “under $300 = FBT-free”. This is not true. Entertainment is generally taxable regardless of value.
This is where many holiday expenses get misclassified.
Holiday functions create their own set of rules.
On-premises events (during work hours): These are usually not subject to FBT. The ATO considers them part of the workday and often qualifies them under minor benefits.
Off-site Christmas parties: These typically attract FBT for employees and their associates because they provide entertainment.
However, client attendees remain exempt - they’re not employees and therefore not fringe benefits.
Mixed-attendee events require cost-splitting: If your event includes a mix of employees, partners, and clients, each attendee category must be separated. Only the portion relating to employees and their associates can attract FBT.
Compliance tip: After the event, capture an attendee list while it’s still fresh. This forms your basis for cost allocation.
Holiday gifts are a generous tradition and also the area where finance teams make the most assumptions.
Gift cards, hampers, wine, or retail goods
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Usually exempt if under $300 |
Entertainment gifts (concerts, shows, experiences) |
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The trickiest part isn’t identifying the gift, it’s tracking the cumulative value.
Outcome: All gifts become taxable — not just the second one.
This scenario happens more often than teams expect, especially when gifts aren’t purchased centrally.
The Minor Benefit Exemption is one of the most helpful, but most misunderstood parts of FBT.
To qualify:
If any one of those conditions isn’t met, the exemption usually cannot apply.
Compliance tip: Keep a running total of gifts per employee during November–December. Multiple small gifts often tip people over the threshold without being noticed.
Rules matter but without documentation, the ATO won’t accept them.
For holiday FBT, you need to keep:
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For events: |
For gifts: |
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Holiday FBT isn’t difficult because the rules are complicated — it’s difficult because manual processes can’t keep up with the pace and volume of December spending.
When expenses, gifts and events move fast, you need a system that moves faster.
That’s where ProSpend changes the game.
ProSpend bakes FBT intelligence directly into your spend workflows.
Instead of relying on managers to choose the right category, or chasing missing receipts weeks later, ProSpend handles the complexity automatically:
This isn’t just automation, its protection.
It protects your team from misclassification, protects your business from unnecessary tax, and protects your January from becoming a reconciliation nightmare.
Holiday spending should be simple to manage and it can be, when you understand how the ATO assesses benefits and you have a consistent framework for classifying them. The more clarity you have around Recipient + Type + Value, the easier it is to stay compliant without slowing down the business.
If you want to take the manual work out of holiday FBT and make the whole process faster, cleaner and more accurate, speak to our team about automating it with ProSpend.
Book a demo and see how effortless FBT can be.