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.

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