When it comes to paying tax at Christmas, forget about Santa Claus and yuletide goodwill.

Employers putting on an end-of-year party or providing non-cash benefits to staff will be caught by a myriad of different rules incorporating entertainment tax, fringe benefit tax and income tax on individual employees, according to PricewaterhouseCoopers director Ray Headifen.

Small employers, in particular, were often unaware of the tax obligations they triggered by showing end-of-year appreciation to staff, he said.

"I'm sure a lot ef employers give away a few bottles of booze or whatever to their staff and don't know they have to pay fringe benefit tax on it."

Christmas gifts and vouchers were normally subject to fringe benefit tax at the sliding rates introduced this year, and 50 per cent of the cost of staff Christmas parties was not deductible under entertainment tax rules - and therefore taxable at the 33 per cent company rate.

"As we enter the Christmas festive season, remember that the benevolence of employers is not matched by our income tax rules," Mr Headifen said.

Entertainment tax applied to most Christmas benefits provided by employers.

When gifts could be "consumed" at the employee's discretion - for example, meal vouchers, gift-wrapped wine or Christmas hampers - fringe benefit tax kicked in.

Christmas cash bonuses were subject to normal employee income tax.

"The underlying rules on Christmas benefits haven't changed for a number of years, but some companies forget to record them within their tax records." Mr Headifen said.

Employers should carefully review staff benefits to ensure the correct tax rules are being applied. They should also check whether they qualified for exemptions, though few were still available.