It’s no secret, small businesses face incredible headwinds going into 2023. You may be tempted to save money and forgo your 2022 end of year celebration.

However, here are 10 reasons why you should have an end of year function for your business:

1. End of year functions boost positivity.
2. Reward hard work and build staff morale leading to increased productivity, retention, and attendance.
3. Demonstrate your appreciation for your staff.
4. Give your staff a chance to blow off steam together can help improve staff relations, increase collaboration and in turn boost productivity.
5. Celebrate success and learn from failure.
6. Create a sense of unity by reflecting on the past and looking to the future.
7. It’s an opportunity to reinforce company values.
8. Team spirit improves and increases staff loyalty.
9. Throwing a great end of year bash says a lot about what kind of leader you are and can foster respect and comradery.
10. Everyone needs a break and a chance to have fun including the boss!

So, how can you have your function and make it tax deductible?

Holding an end of year function on business premises during work hours is the most tax effective option for businesses. The cost of a light meal and drink will be tax deductible to the employer with no FBT liability incurred. The meal can be several courses and include a variety of foods, but must exclude alcohol. In addition, the food must not be so lavish, such as a 10-course degustation, that it turns into entertainment.

However, most Christmas parties are not held on business premises, but at a restaurant. If the cost of food, drinks and alcohol is kept to less than $300 per employee, no FBT is payable by the employer. Unfortunately for the employer, they will not be able to claim a tax deduction or GST credit for the cost.

If you want to show your appreciation another way a non-entertainment gift valued at less than $300 given to an employee will be tax deductible to the employer.

Ideas for tax deductible gifts include:

• A coffee machine.
• Books or novels.
• Flowers or chocolates.
• Christmas or gift hamper.
• Bottle of wine, spirits or liqueur.
• A bottle of perfume or aftershave.
• Vouchers for retailers e.g. David Jones, Myers, Jack London, etc.
• Watch, handbags or wallets.

Whatever you decide to do make sure that everyone celebrates safely and you have a well-deserved holiday break.