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What are the FBT implications on a business rewarding staff with Gift Cards?
How can you maximise the value of gifts to your staff & minimise your business’ FBT tax exposure?
Enjoy our quick guide to FBT of Gift Cards.

Business staff love Gift Cards, they are a great alternative to bonuses, or physical presents.  The reason they love Gift Cards extends beyond the form, in many cases Gift Cards given to business staff don’t incur income tax (applied up to 47%). Rewards & Bonuses paid as part of a salary or wage are taxed at the recipient’s marginal rate. Payroll enabled Staff Gifts can translate to much less in the staff bank accounts than what was given.

Fringe Benefits Tax (FBT) in Australia is paid by employers at 47% on certain benefits provided they provide to their employees beyond remuneration (income). However, in many instances staff Gift Cards can be income tax free to the recipient and surprisingly FBT & payroll tax exempt to the business. How can this be done?

FBT Gift Cards Tax Rules (Australia) – Simplified

In general, where an employer buys a voucher/gift card and provides it to an employee, the FBT rules apply. There are a some important exceptions that business’s need to be aware to minimise exposure to FBT, most importantly the FBT Minor Benefit Exemption.

The Minor Benefit Exemption – Gift Cards

Broadly the Gift Card should be valued at less than $300 & provided on an infrequent or irregular basis.

  • If you provide gifts ensure your give staff certain items known as “non-entertainment” gifts that cost less than $300, as the amount is generally fully tax deductible with no FBT payable.
  • Movie, & Sporting tickets are generally regarded as “entertainment” gifts and should be avoided.
  • Christmas Parties – Keep the cost per person under $300, and ensure the benefit is provided once a year, a Christmas party qualifies for the minor, infrequent and irregular exemption, and will not attract FBT.
  • Expenses Reimbursement for business expense such as “travel for work expenses” are generally FBT exempt
  • Safety Awards genuinely related to occupational health or occupational safety achievements that is granted to an employee is exempt from tax if its value doesn’t exceed $200.
  • Long Service Awards granted in recognition of 15 years or more service for up to $1,000 are FBT exempt.
  • Health Workers have different FBT rules that may apply.

FBT exemption cannot be claimed for benefits that could be considered principally as remuneration

When constructing your Reward & Recognition Programs consider the guideline on structure:

  • Ensure that any single gift is below $300.
  • Reward positive behaviours beyond the expectations of employment.
  • Recognise infrequent milestones such as birthdays & work anniversaries.
  • Ensure programs are run across teams of people and recognise established criteria.
  • Use peer nomination to demonstrate recognition beyond general work generated outcomes.
  • If your budget exceeds $300 per person consider having a number of different categories that run over a longer period, which would mean they could be rewarded on multiple occasions within the minor benefit exemption limit for different behaviours or achievement milestones.

Building a simple reward & recognition program should be easy following these simple guidelines, of course we recommend that every business seek its own tax guidance from a professional tax advisor.

Now you know you can save tax on MicroGifts call us now on 1300 000 889 or Request a Quote

For more information on FBT on Gift cards check the ATO website

Summary
Article Name
FBT on Gift Cards in Australia
Description
Gift Cards given to staff of less than $300 & provided on an infrequent or irregular basis are generally FBT exempt under the The Minor Benefit Exemption Rule.
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