Tis the season to throw a Christmas party for your office staff!
A holiday get-together is a great way to bring the team together, relax and give the shop talk a break for a few hours.
You might bring in Santa for a visit, buy a few bottles of rum and eggnog, and put out a feast for everyone.
The good news is, the expenses are deductible on your business taxes.
The bad news is … oh heck, there’s no bad news. It’s Christmas!
Well … OK, there are a few guidelines.
Be festive but follow the rules
In May, we wrote about meals and entertainment expenses for businesses.
We told you that businesses are allowed to deduct 50 per cent of the amount of expenses for food, beverages and entertainment. And it all has to be considered “reasonable” and directly related to the conduct of your business.
The annual Christmas party doesn’t follow those rules (thank goodness).
But it does have its own rules to be eligible:
- The Christmas party must be open to all employees. If only executive, shareholders and select employees are invited, you are limited to a 50 per cent deduction.
- You must mention the business some time before or after the meal or entertainment.
- The costs must be reasonable. It’s always a good idea to keep your holiday celebration within your budget but remember, you can’t create or increase a loss with business expenses.
- You must keep all receipts.
- You can only host six events a year. Any extra events do not qualify for the 100 per cent deduction.
You also don’t have to hold the party at your place of business to be eligible. You can take it off-site to a restaurant, a conference room or a hall, and you can claim the rental expense.
And don’t forget to ensure your employees have a safe way home. We like to see employers give taxi chits, so they can have a few drinks and still get home safe and sound.
Have a terrific time!
Here to help
A1 Accounting, a Calgary accounting and bookkeeping firm, is here to assist you with your taxes and planning. We specialize in personal taxes and small-business accounting and financial services. Contact one of our tax specialists and we can help you optimize the tax benefits and credits available to self-employed individuals and small businesses.
Fill out our contact form or give us a call at 403-226-8297.