- Make sure you understand how fringe benefits tax (FBT) can impact your Christmas purchases for employees.
- Use your business credit card’s online shopping portal to earn extra rewards on client and staff gifts.
- Not sure where to start? We’ve got a handful of great suggestions for work Christmas presents this year.
The holiday season is almost here, which means it’s time to start thinking about Christmas presents. And as a business owner, you not only have to consider gifts for friends and family – a time-consuming task in itself – but also your clients and staff.
Christmas time is a cash bonanza for retail. In fact, last year Aussies spent more than $10 billion on presents, with the millennial market really forking out – 85% of them spent up to $1,000 on gifts.
So whether you like it or not, there’s an inherent expectation that the holiday season means giving and receiving presents. And because maintaining your working relationships is so important to the ongoing success of your business, you might just have to bite the bullet and put a few requests into old Santa Claus.
The good news is that Christmas shopping doesn’t have to be a negative experience. By using your business credit card to your advantage, you can make sure you reap a whole range of benefits from your holiday spending – and not just on gifts, but on parties, food and drink as well. Here’s what you need to know.
First things first: Keeping the taxman happy
In Australia you’ll need to be conscious of how tax affects Christmas gifts for employees – if you don’t stay on top of it, you could be in for a whopping fine from the ATO. So make sure you’re across fringe benefits tax (FBT) and how it could impact you this holiday season.
Presents for staff aren’t considered ‘income’ so your employees won’t have to pay income tax on them. However, depending on the circumstances, you may be liable to pay FBT. The good news is there’s no separate FBT category for Christmas spending, so you’ll just need to be aware of the implications for certain purchases.
So long as you’re not a tax-exempt business and you’re not using the 50-50 split method for meal entertainment you can get the following benefits:
Food and drink expenses for Christmas parties are FBT-exempt – so long as the party occurs on a business day and on company premises, and the food and drink are consumed by current staff.
The party itself can be considered a ‘minor benefit’ so long as the event costs less than $300 per employee.
Gifts for employees valued at less than $300 may be considered a minor benefit and therefore exempt from paying FBT. Gifts cards are an easy way to ensure you stay under that tax threshold.
Consider gift cards for simplicity
As you can see above, sometimes things can get a little tricky when you’re dealing with partial tax and different laws about what does and doesn’t constitute an FBT-free gift. That confusion is compounded when you’re buying multiple presents for staff and clients and you can’t seem to keep track of how much every individual gift costs.
To make your life easier, think about gifting everyone a set amount on a gift card. For one, you’ll know that you can come in under that tax-exempt threshold of $300, and it also means your employees in particular won’t be comparing their presents with each other – because they’ll all have the same amount allotted to their card.
For special clients, gift cards could be a tricky business. Some may be very thankful for your thoughtful gift, while others may simply think you’re giving them back money they’ve already paid to you. If you’re concerned that a client could misinterpret your Christmas present to them, it’s recommended that you play it safe and come up with a more personal idea for their gift. (See our list of recommendations for client purchases at the end of this article).
Take advantage of your business credit card’s shopping portal
Sure, you can earn points from most purchases so long as your business credit card is linked to a rewards program, but at the average shopfront and online store you’ll only earn the base amount of points. If you do your Christmas shopping through your reward’ program’s online shopping portal, however, then you might be able to earn double or even triple points or more on any gift purchases.
For example, say you have a Qantas Points credit card or Velocity Points credit card, such as the NAB Qantas Business Signature Card or the American Express Velocity Business Card, you’ll be able to make purchases via the Qantas Online Mall or Velocity eStore, choosing gifts from retailers like David Jones, Myer, The Iconic, Catch, Country Road and many more. You’ll be earning extra frequent flyer points at a high rate, to reduce your company expenses or spend on more gifts.
You don’t have to do all your Christmas spending in the same place, but it sure makes life easier – and it means you’ll be racking up far more reward points than you would with a standard trip to the shops.
Use your accumulated rewards – it’s easier on your wallet!
But what happens when margins are tight? Maybe you weren’t able to grow your business as much as you expected, and funds for Christmas presents aren’t exactly at an all-time high. You’ll still want to show your clients that you care this holiday season, and a thoughtful gift for employees could improve staff retention for the year to come.
There’s no need to go into serious debt with your Christmas spending if you’ve spent the past few months using your business credit card wisely. By now, you may have thousands of reward points you can redeem for holiday gifts. While your accumulated points might not be enough to cover everyone’s presents, even a small dent in your spending can ease the stress of Christmas costs..
So if you’re thinking about buying your staff and clients a present this year, why not check out your credit card provider’s rewards store? You might just be able to cross a few names off your list by using up all those points you’ve already earned.
Christmas gift ideas for staff
Not sure what to buy for your employees this Christmas but absolutely sure you don’t want to go down the basic gift-card route? Here are some ideas:
Custom-designed reusable tote/shopping bags for the environmentally conscious employees
Small, live succulent plants they can keep at their desks (low-maintenance gift)
A wine subscription – either individual or for the whole office
A meal voucher for their favourite restaurant
Boutique hand sanitisers, candles or stress balls for their work desk
High-quality suitcases for the regular business traveller
Stainless-steel and insulated travel coffee mugs
Free movie tickets
Bath and body gifts from a ritzy store
Something the whole office can enjoy – e.g. speakers for the music system, new plants, a ping-pong table, etc
Christmas gift ideas for clients
It can be a lot trickier buying gifts for clients, as some may expect a more personalised present rather than a standard mug or calendar emblazoned with your company’s name. Here are some suggestions to get your Christmas shopping off to a good start:
An engraved wine tool kit including a stopper and corkscrew
Selection of your favourite coffee blends or tea varieties
Wireless phone charger
A special coffee table book that’s unique to your client’s industry
High-quality fountain pen
Gourmet food hamper
Voucher for online classes
Catered lunch or dinner for your client and their team
A handwritten note – inexpensive but thoughtful!
Donation to a charity of their choice
*Disclaimer: Always conduct your own research about the tax implications of business activity.