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Don't Let The Office Party Get too Taxing

OPINION: The taxman's watchful eye is never far away. Giving Christmas gifts and parties for staff and clients will have tax consequences for employers.

Gifts from employers are normally taxable under the fringe benefit tax rules. Generally, gifts to clients are fully tax deductible and no fringe benefit tax liability will arise.

The costs of social functions, such as the work Christmas party for staff, may not be fully tax deductible for the employer. The entertainment regime limits the income tax deduction that employers can claim to 50 per cent of entertainment expenditure.

The limitation applies to events where food and drink are provided off the work premises as well as corporate boxes, holiday accommodation, yachting or other boat trips. The limitation also applies to the incidental costs of such entertainment including any food and drink, waiting staff, hireage of crockery, glassware or utensils and music or other entertainment.

There are a number of exclusions from the limitation that generally apply where entertainment, including food and drink, is for business purposes only such as during business travel or a conference or educational course.

Where any amounts cannot be claimed as an income tax deduction due to the limitation a supply is deemed to take place for GST purposes. This means that any GST claimed on the non-deductible entertainment must also be paid back to Inland Revenue.

While in some instances the entertainment regime and the fringe benefit regime overlap double tax does not result.The distinction comes down to whether employees can choose when to enjoy the benefit.

If Christmas food and drinks are provided to employees, the cost is not subject to fringe benefit tax because employees can't choose when and where to enjoy the benefit. However the entertainment limitation will apply.A gift voucher provided to employees may be subject to fringe benefit tax but the cost will be fully deductible.The tax rules surrounding gifts, parties and other benefits can be complicated. Getting it right can make the event all the more enjoyable.

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原文見: Don't Let The Office Party Get too Taxing | SourceEC - Corporate Gifts Singapore | Promotional Gifts | Door Gifts Blog
Don't Let The Office Party Get too Taxing Reviewed by Souvenir on 9:30 AM Rating: 5

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