“Companies that are finalising their Christmas party budgets could be mindful of ways they can control their Fringe Benefits Tax and after-tax costs while not being seen as a Scrooge," Purdon said.

“We always advise organisations to pay the appropriate taxes and in regard to Christmas parties there are some interesting FBT elements to watch out for.

“For example, if you keep the value of your party below $125 per employee and you do not provide similar functions to your employees on a frequent and regular basis then it may be considered minor infrequent and irregular and therefore not subject to FBT, but you need to be aware that there are certain conditions on how the cost must be broken up to achieve this advantage."

Food and drink must be less than $100 per employee and entertainment such as a DJ or band no more than $25 per employee and separately invoiced.

“Many employers are now providing transport to venues or cabs home, these costs must also be factored into the $125,” said Purdon.

For employers planning on playing Santa, Christmas gifts can attract FBT depending on when and how they’re given.

“There are all types of rules and regulations that surround Christmas gifts but generally you need to be aware that they will be counted in the $125 if they’re distributed at the office party," Purdon said.

"But if you give out presents on another day then they are less likely to attract FBT if their value is below the $100 limit.

“If you give an employee a gift such as a bottle of wine to take home then it can be a means to entertainment, not entertainment in itself. Therefore it can be exempt from FBT if it costs less than $100 and similar gifts have not been provided to the employee on a regular or frequent basis in the past. But if the employee opens the bottle and consumes the contents while still in the office then you won’t get a deduction.

“It’s amazing how much you can save in FBT and tax deductions just by investigating the tax laws and structuring your budget accordingly,” said Purdon.