How to Handle Staff Notices and Tax Deductions This Holiday Season
The holiday season is upon us, and while it’s a time for joy and celebration, it also brings its own set of challenges for small business owners!
You might be wondering how to properly inform your team about the Christmas break or scratching your head over what expenses you can actually claim from the office Christmas party. Don’t worry! We’re here to take the guesswork out of business holiday planning so you can enjoy the festive season stress-free.
Christmas Shutdown – Giving Notice to Your Staff
The end of the year often comes with a slowdown in business activities, leading many companies to shut down for a brief period. However, this isn’t as simple as locking up and heading home; there are rules and obligations you must follow.
What is an Annual Shutdown?
An annual shutdown is a period when a business temporarily closes, often during slow periods like Christmas and New Year. It’s a common practice in Australia, especially for businesses that experience a lull during the holidays.
What Are My Obligations?
Employers are generally required to notify their employees in advance about any planned shutdown. The notice period can vary depending on the award or agreement that applies to your employees. Make sure to check the specific requirements for your industry.
Public Holidays
Remember, public holidays during the shutdown period are generally paid days and should not be deducted from an employee’s annual leave balance.
Public Holidays (Christmas Season 2023)
- Sunday 24 December – Christmas Eve (QLD, South Australia)
- Monday 25 December – Christmas Day
- Tuesday 26 December – Boxing Day
- Sunday 31 December – New Year’s Eve (from 7 pm to midnight) (Northern Territory, South Australia)
Can You Force Annual Leave?
In some cases, employers can direct their employees to take annual leave during a shutdown, but this is subject to certain conditions.
Usually, the direction to take an annual leave during a shutdown must be :
- Reasonable
- In writing
- Given to affected employees within the required notice period.
Always consult the relevant award or agreement to ensure you’re compliant.
What If My Employees Don’t Have Enough Annual Leave for the Shutdown?
If an employee doesn’t have enough annual leave to cover the shutdown period, the award or agreement may allow them to take unpaid leave or to use annual leave they haven’t yet accrued. This arrangement should be agreed upon between the employer and the employee.
What Do I Do If My Award Doesn’t Have Shutdown Rules?
Employers can’t force their employees to take annual leave during a shutdown if their award or agreement doesn’t have rules allowing it. However, employees can voluntarily agree to take annual leave or unpaid leave during this period.
Can My Employees Work During the Shutdown?
Employers can ask their employees to work and do overtime or on public holidays, provided the request is reasonable. Employees can refuse such a request if they have reasonable grounds. The reasonableness of the request depends on various factors, including:
- The needs of the business
- The employee’s role
- Their personal commitments.
Employees who continue to work during a business shutdown should receive their normal pay. If a public holiday falls during the shutdown, they should either be given the day off without loss of pay or be paid the public holiday rates under their award or agreement.
How Do I Pay Employees Who Aren’t Working on a Public Holiday?
When a public holiday falls on a full-time or part-time employee’s usual workday, employers must pay them their base pay rate for the ordinary hours they would have worked. This rule applies even if the employee is on paid annual leave during a shutdown.
Christmas Staff Functions – What Can I Claim?
Hosting a Christmas party for your staff is a great way to celebrate the end of the year. But did you know that there are specific rules around what you can and can’t claim as a business expense?
All About Fringe Benefits Tax (FBT)
If you’re planning a lavish Christmas party for your team, you might be wondering about Fringe Benefits Tax (FBT).
FBT is a tax employers pay on certain benefits they provide to their employees, including their employees’ family or other associates. The benefit may be in addition to, or part of, their salary or wage package. In the context of Christmas parties, FBT can apply to the cost of food, drinks, and even venue hire. However, there are some exemptions and thresholds, so it’s crucial to understand the following conditions to avoid any unexpected tax bills:
Where is the Party?
The location of your Christmas party can have tax implications. If the party is held at your business premises on a regular working day and is only for current employees, the costs like food and drinks are generally exempt from Fringe Benefits Tax (FBT).
Who’s Invited and How Much Will It Cost?
The FBT implications can change based on who you invite and how much you spend per head. For example, if the cost per employee is less than $300, you may be exempt from FBT under the minor benefits exemption.
Inviting clients to your Christmas staff function can add a different layer to the tax implications. Generally, the cost of entertaining clients is not subject to Fringe Benefits Tax. So, if you’re planning to extend the invitation to clients, keep this in mind when calculating your expenses and potential tax liabilities. Make sure to keep a separate record of the costs associated with entertaining clients to ensure accurate tax reporting.
Employee Christmas Gifts
Gifts can also have tax implications. Non-entertainment gifts like beauty products or food hampers costing less than $300 per employee can be a tax deduction and are generally exempt from FBT.
Seek Professional Tax Advice
If you’re unsure about the tax implications of your Christmas party or gifts, it’s always best to consult with a professional to ensure you’re not unintentionally giving more than you planned.
The holiday season doesn’t have to be a stressful time for small business owners! You can navigate this period smoothly with proper planning and understanding of your obligations and entitlements. If you need help sorting out the financial aspects of your holiday preparations, Accounts All Sorted is here to assist you. Contact us today to make your holiday season hassle-free
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