This applies to clubs, charities, government departments and other organisations which are wholly or partially income tax exempt. The fringe benefits tax implications of providing Christmas parties for employees (and their associates) of tax-exempt bodies are different to those of income tax paying bodies. There are different rules for tax-exempt bodies when it comes to the provision of entertainment because they do not pay income tax. A taxable employer who provides entertainment that is exempt cannot claim the outgoings as income tax deductions – so they pay income tax on those outgoings. For an exempt employer, the outgoings will be subject to FBT, but there will of course be no income tax liability. In this way, there is broadly equity between taxable and tax-exempt employers. There is no separate category of fringe benefit for Christmas parties. Where you provide your employees with a Christmas party, it will be a tax-exempt body entertainment fringe benefit, regardless of whether the Christmas party is held on your premises. Your organisation is a tax-exempt body if your organisation’s income is either wholly exempt from income tax (for example, a local government body or a club that earns income from members only), or partially exempt from income tax (for example, a club that earns income from both members and non-members).