For FBT purposes there may be different consequences for payment of the taxi fare. 
In respect of clients, the taxi fare is considered to be part of the
entertainment expense and no deduction is allowable.  For employees, if the fare is for travel from
home to the place of entertainment (not being their place of employment) and
return home again, the benefit is considered to be for the facilitation of
entertainment and is not a separate benefit from the entertainment itself.

The result is that the employer would then have to rely on the total entertainment package being under $300 for the minor
benefit rule to apply.

However, if the Christmas function is held on the employer's premises and the employer chooses to send the employee home
by taxi, the taxi trip is FBT exempt provided that the trip is a single trip,
which began at the employee's place of work. 
The exemption would apply if the employee went from the work place to
home, or any other place.  However, the
exemption would not apply if the trip was broken and continued at some other
time.  For example, the employee gets a
taxi from the workplace and goes to a nightclub; that trip is deductible and
exempt from FBT.  If the employee later
gets another cab to home, that leg of the trip would be deductible to the
employer but FBT would be payable.

Note however, that if the employer is using the 50/50 split method of calculating FBT and deductions, the taxi travel would
always be included in the cost of entertainment, and there would be no exempt
journey for travel from the workplace to home.

See also the article about Employee Christmas Parties and Gifts - Any FBT?