Established 2011

Can You Claim Work Christmas Party Expenses?


A Smart Guide to Festive Business Investments


Ah, the work Christmas party. It's that time of year when tinsel adorns the office plants, and the age-old question resurfaces: "Can we claim this as a business expense?" Well, grab a mince pie and settle in, because we're about to unwrap the gift of knowledge on this very topic.

The Christmas Party Conundrum: 

More Than Just Mistletoe and Wine

Let's face it, a well-executed work Christmas party is more than just an excuse to see Karen from accounting attempt the Macarena. It's a powerful investment in your team, your culture, and your future success. But before you start planning a bash to rival the Queen's garden party, let's dive into the nitty-gritty of tax claims and turn your festive gathering into a savvy business decision.

Sleigh the Difference: Tax Deduction vs. Business Expense

Understanding the Difference Between a Tax Deduction and a Business Expense

When planning your work Christmas party, it's important to understand the distinction between a tax deduction and a business expense. 

Just because an expense isn’t tax-deductible doesn’t mean it’s coming out of your personal pocket.

 As a business owner, many of the costs associated with hosting a Christmas party are still legitimate business expenses, even if they don’t qualify for a direct tax deduction under ATO rules.

A tax deduction reduces the amount of income tax your business has to pay, but if an expense isn’t deductible, it doesn’t mean you’re footing the bill yourself. The cost of the party is still covered by your business as part of its operating expenses. So, while some Christmas party costs may not give you a tax break (like certain entertainment or luxury off-site parties), your business will still pay for these, not you personally. The key takeaway? Even if it’s not deductible, it’s still an expense to the business, not a hit to your personal savings or your kids' Christmas fund.

Tip:
When planning your Christmas party, it’s essential to budget for both deductible and non-deductible expenses, understanding that some costs will lower your taxable income, while others will simply be recorded as standard business expenses. Either way, you’re not dipping into your personal savings to cover the costs. So go ahead, plan that unforgettable event, and remember—it’s still a valuable business investment, even if some costs aren't deductible!

The ATO's Christmas Party List

What's Naughty and What's Nice?

The Australian Taxation Office (ATO) has specific guidelines when it comes to claiming Christmas party expenses. They're a bit like Santa's list, but with more clauses (pun intended).

Entertainment or Essential Team Building?

In the eyes of the ATO, your run of the mill traditional Work Christmas Party falls under the umbrella of 'entertainment'. This includes the usual suspects: food, drinks, and venue hire. But don't let that dampen your Christmas spirit! There are still ways to claim some of these expenses, depending on how you structure your yuletide yarn.


The Nice List

Nice List (Potentially Deductible & Seriously Strategic)

Team-building challenges: Quizzes, scavenger hunts, and problem-solving games that require collaboration and communication are a fantastic way to inject energy into the party while building team culture. And yes, when framed as a team-building activity, you’re looking at a potential deduction while also improving workplace dynamics. Win-win!

Collaboration-focused activities: Set up stations for mini team challenges like escape room-style puzzles or trivia that require brainstorming and teamwork. Not only will this keep the festive spirit alive, but it also aligns with your company’s goals of fostering collaboration and innovation—an easy justification for the ATO as a genuine business investment!

Inclusive activities for everyone: Ensure that everyone is involved by incorporating accessibility-friendly games. This shows you’re serious about inclusivity and team bonding, while creating an environment where everyone feels valued. As a result, your Christmas party becomes much more than just a social event—it’s an opportunity to strengthen the culture of inclusion in the workplace.

Culture-boosting workshops:
Consider hosting mini culture-building workshops as part of the celebration. Whether it’s a fun communication training session or a light-hearted leadership exercise, these can be blended seamlessly into your festive celebrations. The best part? These are legitimate business investments that align with training and development goals, making them deductible under the right conditions.

Team bonding through collaboration: We all know collaboration doesn’t just happen by magic. Integrate structured activities into the party that focus on cross-department communication and teamwork, such as a fun hackathon or brainstorming session. The key is to highlight how these activities foster teamwork and skill-building, ensuring that the investment in your Christmas party drives measurable business value.

Focus on inclusion and diversity: Show your commitment to company values by hosting themed activities that celebrate diversity or promote inclusion within your teams. Whether it’s multicultural holiday traditions or diverse team-building exercises, you’re making the Christmas party a true reflection of your company’s core values. This ties in perfectly with modern business objectives and is a great talking point for that year-end review.

Mindfulness and wellness sessions: Why not mix in a wellness corner with a brief mindfulness session or stretch break? Not only does this help your team unwind, but it’s also another way to show that you care about your employees’ well-being—while staying within the ATO’s guidelines on team-building and training investments.

Skill-building through play: Let’s face it—parties can be fun and productive. Engage your team with activities that promote leadership skills, time management, or even conflict resolution—all disguised as games. Whether it’s a cooking competition, a timed treasure hunt, or a quick leadership simulation, these activities offer valuable skill development opportunities. The bonus? These are all business investments, enhancing your team while making the most of your Christmas party budget!

Celebrating collaboration: Make the party an opportunity to reflect on team successes and achievements from the year. A small awards ceremony for most innovative idea, best team player, or collaboration champion reinforces the culture of teamwork and engagement. This isn’t just a celebration—it’s a strategic investment in team culture that boosts morale and showcases employee value.

Encourage creativity with inclusive games: Try team-building games like "Design Your Own Holiday Product", where teams come together to develop a fictional product and pitch it to the group. It’s collaborative, inclusive, and gets people thinking outside the box—all while nurturing creativity and boosting team spirit.


Why It’s a Genuine Business Investment:


Throwing a work Christmas party isn’t just about fun and festivity—it’s a strategic business investment. By focusing on team-building, inclusion, and collaboration, these events foster a culture of engagement, improve employee satisfaction, and boost retention. Whether through structured team-building activities or informal bonding, these parties give your team the opportunity to connect outside of regular work, strengthening both personal and professional relationships.

Plus, investing in your team’s culture now pays off long-term. Happy employees are productive employees, and a well-structured Christmas party can directly impact team dynamics, communication, and creativity—leading to improved workplace performance in the year ahead. And let’s not forget, many of these activities could be tax-deductible, making it an even smarter business decision.

Bonus Tip: Work Christmas parties that focus on skill-building and collaboration have the potential to offer long-term ROI. You’re already spending the money—so why not make it count by using the celebration to strengthen your team, foster collaboration, and build a workplace culture that pays dividends throughout the year?

Naughty (Likely Non-Deductible)

The Naughty List: Where Your Tax Deductibility Might Get Stuck in the Chimney

While the Christmas spirit is all about giving, not everything on your wish list will make it onto the ATO’s ‘Nice’ list. Just because some expenses might not be deductible doesn’t mean you can’t still have an amazing event. Below are a few areas that might make your tax deductions a little more bah humbug than holiday cheer—don’t worry though, we’re focusing on the things that won’t ruin the fun (or your budget)!

Personal Gifts or Bonuses: While showering your team with gifts sounds like a great idea, personal bonuses or high-value gifts, like cash bonuses or luxury items, don’t typically fall under deductible entertainment expenses. However, a thoughtful, well-branded gift like a team holiday mug or something tied to your company culture still spreads festive cheer without the FBT baggage!

Purely Social Gatherings: If the party is framed as purely social without a focus on team building, collaboration, or employee well-being, it’s likely not deductible. That doesn’t mean you shouldn’t enjoy some fun, but consider blending your party with strategic activities that also foster communication and collaboration to boost your ROI and keep it deductible.

Spouses and Plus-Ones: While it’s always fun to invite spouses or partners to a Christmas party, costs associated with non-employees aren’t deductible in most cases. Keeping the event focused on the team ensures it stays tax-friendly while strengthening workplace relationships—plus, there’s no need to exclude the plus-ones, but it might be good to budget for these extra attendees as non-deductible expenses.

Extravagant Door Prizes: While it's tempting to offer big-ticket door prizes, think carefully about over-the-top gifts. These often fall into the non-deductible zone if they don't align with minor benefit exemptions. Keep your prizes modest but meaningful—team recognition and fun experiences often mean more than a fancy gadget, and you can keep it strategic by making the team the star of the show.

Remember, just because something's not deductible doesn't mean it's not valuable. That's where strategic planning comes in, and coincidentally, where My Ultimate Team shines brighter than Rudolph's nose.

ROI: Return on Indulgence!

Maximising Your ROI: A Christmas Miracle

Your Christmas Party is the Gift that Keeps on Giving. A well-executed Christmas party is like a perfectly wrapped present for your business. It improves company culture, strengthens bonds, boosts morale, and increases employee retention. It's the difference between "Oh, another year-end function" and "I can't wait for our Christmas do!"

Investing in your team's happiness isn't just about spreading Christmas cheer. It's about creating a workplace that people are excited to return to in the New Year. And let's be honest, in today's job market, that's more valuable than a golden ticket to Santa's workshop.

Hosting a work Christmas party isn’t just a one-night celebration—it’s the gift that keeps on giving! 

Here’s why your end-of-year bash is more than just eggnog and tinsel—it’s a serious investment in your team and business!

Boosts Team Morale: Nothing says “we appreciate you” like a festive celebration. A Christmas party shows your team their hard work didn’t go unnoticed, boosting morale and sending positive vibes into the new year.

Strengthens Team Bonds: From awkward icebreakers to epic dance-offs, your Christmas party gives employees the chance to bond outside the office, improving communication and collaboration when they’re back at their desks.

Encourages Collaboration: Get creative with some team-building games or activities during the party—sneaking in a bit of teamwork between the mulled wine and mince pies sets the stage for better workplace collaboration down the track.

Improves Retention: A killer Christmas party can make employees feel valued and part of something special, reducing turnover and showing them they’re in the right place. It's cheaper than rehiring, and way more fun too!

Reinforces Company Culture: This is your chance to showcase what your company is all about! Whether it’s inclusivity, creativity, or a bit of quirky fun, your party becomes an embodiment of the values that make your business unique.

Promotes Wellness: An end-of-year celebration is a great way to let your team unwind and de-stress. Happy employees = productive employees. It’s a win-win!

Launches the New Year on a High: A well-executed Christmas party sets the tone for the year ahead—teams return recharged, reconnected, and ready to tackle whatever’s next on the agenda.


Who knew a Christmas party could pack such a punch? It’s the ultimate festive investment!

Festive Party Tax (FPT)

Fringe Benefits Tax: The Ghost of Christmas Expenses

We wish we were just talking about the proverbial Festive Party Tax (FPT) – the hidden cost of having way too much fun at the office Christmas party! I.e the potential hangover!

Enter the Fringe Benefits Tax (FBT) - the Scrooge of the tax world. Fringe Benefits Tax (FBT) is a tax that employers pay on certain benefits they provide to their employees (or their employees' family or other associates) in place of, or in addition to, salary or wages. These benefits are referred to as "fringe benefits" and can include things like gifts that you may give your employees at a Christmas party.

Key points about FBT under the ATO:

  • FBT is separate from income tax and is calculated on the grossed-up taxable value of fringe benefits provided.
  • Certain fringe benefits, like minor benefits (under $300 per person, such as small gifts), can be exempt from FBT if they meet specific conditions.
  • Employers are responsible for paying FBT, not the employees, and it applies regardless of whether the benefit is provided directly by the employer or by a third party.

FBT is important to understand when it comes to work events like Christmas parties and the gifts you may give your employees at the party because how the event is structured can influence whether or not FBT applies, which affects tax deductibility.

However, there's a silver lining in the form of the $300 per-person minor benefit exemption. Keep your gifts under this magical number, and you might just reduce your tax liability faster than you can say "Bah, humbug!"


Let's Get This Party Started!

Wrapping It Up (With a Bow on Top)

A thoughtfully planned work Christmas party isn't just an expense; it's an investment in your team and business. It's the difference between a group of colleagues and a high-performing team that's ready to take on the new year like a Boxing Day sale.

At My Ultimate Team, we're not just event planners; we're your partners in creating experiences that resonate long after the last cracker has been pulled. We offer tailored packages that focus on team building, collaboration, and fun, all while helping you navigate the tricky waters of ATO guidelines.

So, why settle for a run-of-the-mill Christmas do when you can have an event that's as beneficial to your business as it is enjoyable for your team? Get in touch with My Ultimate Team today, and let's plan a Christmas party that's both a cracking good time and a smart business move.


After all, 'tis the season to be jolly... and strategic!

Keep It Real: Your Team Deserves the Celebration!

Your team has worked hard all year, and they absolutely deserve an epic Christmas party. Team-building events are a real investment in your business, boosting morale, strengthening bonds, and fostering collaboration. And hey, your business is legit, so there’s no need to get creative with the tax deductions (because let’s face it, orange jumpsuits are not a good look). Just keep it real, stay within the rules, and enjoy the festivities with your team. After all, a well-planned party isn’t just a celebration—it’s a smart business move that pays off long after the last mince pie is gone!

Author Bio - Article Written By Josephine Callahan

This work christmas party inspo article was proudly written by Josephine (Josie) Callahan - Lead Trend Specialist here at My Ultimate Team! Seen here on our office rooftop! With a Bachelor's degree in Journalism and a Diploma in Events Management, Josie brings a unique blend of storytelling and logistical expertise to the world of corproate events and work parties. Over her 15-year career, Josie has turned her passion for celebration into a career of crafting unforgettable team building experiences and her articles have helped thousands of business owners and managers across Australia plan the perfect team event, from SME gatherings to large-scale themed extravaganzas for our large corporate clients. Josie stays at the forefront of party trends through active participation in industry events and her hands-on approach to research, which often involves sampling the latest cocktails and adventure experiences firsthand! Her articles on team building planning have been featured in leading Australian business journals and magazines, solidifying her status as a trusted voice in the industry.

Disclaimer: We are event planners, not accountants. The information provided in this article is intended for general informational and entertainment purposes only and does not constitute professional tax advice or financial guidance. My Ultimate Team Events is not a tax advisor or accountant, and this content is based on our personal experience and understanding. Every business is unique, and tax laws can be complex and subject to change. We strongly recommend that you conduct your own research and consult with a qualified accountant or tax professional to ensure compliance with all relevant tax laws and regulations before making any decisions regarding claiming work Christmas party expenses. My Ultimate Team Events accepts no responsibility for any loss, damage, or liability arising from reliance on this information. Use this content as a fun guide and not as a substitute for professional advice.