FBT - which employee gifts are exempt?

Sometimes you want to reward your team for reaching a sales target, for their birthday, at Christmas time, or just to say thanks. And sometimes, the nice gesture can prove to be more complex when you factor in fringe benefit tax (FBT). Not all perks are treated the same, some, like subsidised gym memberships and discounted products, will attract fringe benefit tax, while cash and cash-redeemable vouchers are taxed as part of PAYE.

Any cash or vouchers redeemable for cash are taxable

If you gift an employee cash, or something that can be exchanged for cash, it’s considered part of their total remuneration. That means it must go through your usual payroll system. However, there is an exemption for employer gifts, provided they stay below a certain value threshold.

You can give your employees vouchers, prizes, or gifts up to a certain value without triggering FBT if the value of the gifts does not exceed $300 in a quarter for any one individual - or $1,200 a year if you file annual returns. The maximum exemption you can claim is $22,500 each year, for all your employees.

There are a few other exemptions, including uniforms, car parks, and membership reward schemes that can also be provided to employees without you needing to pay FBT.

However, once you exceed the exemption threshold, you will need to pay FBT.

We can help with your FBT questions

Rewarding employees can be complex, whether it’s company vehicles, vouchers, discounts, or insurance policy contributions. We can help you understand the complete costs of those perks in the upcoming tax year and explain how the different options might work for your company.

< Older Post

Newer Post >

Becoming an employer of choice

15 October 2025

How to attract great people to your business and how to keep them. Three tips to help you rise to the challenge to become an employer of choice.

What the IRD Expects from You as an Employer

10 October 2025

As an employer, there are several obligations and expectations set by the Inland Revenue Department (IRD) that you must adhere to. Understanding these requirements is essential for maintaining compliance and avoiding any potential penalties. Let's take a closer look at what the IRD expects from you as an employer. Register as an Employer Before you hire your first employee, you are required to register as an employer with the IRD. This is a crucial first step in ensuring that you can meet all tax and payroll obligations. Accurate Record Keeping The IRD requires you to keep accurate and detailed records of all employment-related transactions. This includes: Employee personal details Wages and salary paid Payroll dates and methods PAYE deductions and remittances Details of benefits or allowances provided to employees Maintaining proper records helps ensure that you are reporting and remitting the correct amounts to the IRD. Deduct PAYE Tax You are responsible for deducting PAYE (Pay As You Earn) tax from your employees' pay. This involves calculating the correct amount of PAYE and ensuring it is deducted from each employee's salary or wages before their net pay is provided. Pay Employer Contributions In addition to PAYE, you may also be responsible for contributing to your employees' social security and retirement benefits, depending on the country you operate in. These contributions are typically paid in conjunction with PAYE tax. Issue Statements and Forms At the end of the tax year or upon employment termination, you should provide each employee with a statement showing their total earnings and PAYE deductions. Additionally, filing the appropriate end-of-year PAYE schedules with the IRD is required. File Employer Returns Employers are required to file regular returns with the IRD, which could be monthly, quarterly, or annually, depending on specific regulations. These returns should accurately report all payroll activities, including PAYE deductions. Handle Tax Codes and Changes It's crucial to apply the correct tax codes for each employee's circumstances. Any changes in employment status or tax code must be updated promptly to ensure accurate tax withholdings. Comply with Audit Requests The IRD may audit your business to ensure compliance with employer obligations. As such, being prepared to provide all requested information and records in a timely manner is vital. Adhering to these expectations from the IRD is not just about compliance; it's about fostering a transparent and trustworthy relationship with your employees and the tax authorities. If you need assistance with understanding or managing your obligations as an employer, consider reaching out to a professional accountant. Our team is here to help you navigate these responsibilities seamlessly, ensuring peace of mind and allowing you to focus on growing your business. Feel free to contact us for further information or assistance.

Starting a sole trader business

7 October 2025

Thinking of starting your own sole trader business? The Sole Trader Toolkit from the Ministry of Business, Innovation and Employment has all the basic advice you might need.