Somewhere between picking an activity and getting the booking approved, someone in finance asks the FBT question. It is a fair question, and the answer shapes your per-head budget more than almost anything else.
Here is how fringe benefits tax actually applies to staff events, what the $300 figure everyone quotes really means, and the trade-off that most guides on this topic mention only in passing.
This is general information, not tax advice. Every business is different and FBT gets specific quickly. Check your own situation with your accountant before you commit to anything.
Why a Staff Event Raises FBT at All
Fringe benefits tax applies to benefits an employer gives employees that are not salary or wages. Take your team out for a day of activities and you have provided a benefit, which is why the question comes up.
The ATO treats most of this as entertainment, and entertainment is where FBT rules are at their least intuitive. Which is where the exemption comes in.
The FBT Minor Benefits Exemption
The exemption most staff events rely on is the minor benefits exemption. Two conditions have to be met, and the second one is the one that gets skipped.
One: the value has to be under the threshold. The notional taxable value of the benefit must be less than $300 per person. Note that it is less than, not up to. A benefit valued at exactly $300 does not qualify.
Two: it has to be unreasonable to treat it as a fringe benefit. Being under $300 is not enough on its own. The ATO sets out five criteria to weigh, and in practice the decisive one is frequency and regularity. A benefit provided often and predictably is far less likely to qualify than a one-off.
The other four cover the total value of similar benefits, the total value of associated benefits, how hard it would be to record the values, and the circumstances of the benefit, including whether it was unexpected or effectively a form of remuneration.
The ATO’s guidance is on its minor benefits exemption page.
What That Means for Your Per-Head Budget
In practice, most businesses booking a staff event work backwards from that threshold. Under $300 a head, one-off rather than routine, and the exemption is usually in play.
Two details worth knowing before you build the budget.
- Connected benefits are tested separately. Where you provide separate benefits that are connected, the ATO gives the example of a meal, a night’s accommodation and taxi travel, the $300 threshold applies to each one rather than to the combined total. An activity and a dinner are not automatically one $300 bucket.
- Benefits to associates are excluded from the test. When you are working out whether the notional taxable value is under $300, benefits provided to associates are not counted in.
The Part Most Guides Skip
Here is the trade-off. If the minor benefits exemption applies to entertainment and the cost is therefore exempt from FBT, you generally cannot claim it as an income tax deduction, and you generally cannot claim GST credits on it either.
Entertainment is broadly only deductible where it has been subject to FBT. So keeping an event under $300 a head to stay out of FBT is not automatically the cheaper path. It removes one cost and removes one offset at the same time.
Which way that lands depends on your tax position, your FBT rate exposure, and how you are electing to value entertainment. It is a genuine question for your accountant rather than a rule of thumb, and it is the reason “just keep it under $300” is not the complete answer it gets presented as.
Three Practical Habits
- Book the value per head, not the total. FBT thinking is per person. Get your quotes on that basis and the conversation with finance is a short one.
- Watch the pattern, not just the price. Four events a year at $250 a head reads very differently to the frequency criterion than one event at $250. The number on the invoice is only half of the test.
- Ask the deduction question at the same time as the FBT question. They are the same decision. Asking them separately is how businesses end up surprised at the end of the year.
Where This Lands for a Team Day
None of this is a reason not to run the event. It is a reason to price it deliberately.
A team building day quoted per head, run once or twice a year rather than monthly, is the straightforward case. Christmas parties are the most common version of it and the one the ATO material most often uses as an example. Offsites get more involved once travel and accommodation enter the picture, because those are separate benefits with their own tests.
We quote per head, which makes the finance conversation easy. What you do with the deduction side is between you and your accountant.
Get a Per-Head Quote
Tell us your numbers, your city, and roughly when. We will come back with a per-head price you can take straight to finance.
Get in touch with Great Race or call 1300 504 152.
General information only, current at the time of writing. It is not tax advice and does not account for your circumstances. Confirm your position with your accountant or registered tax agent, and check the ATO’s guidance for the current rules.
