Some quick answers on FBT requirements on gift cards provided to employees by their employer in Australia.
Q. When is FBT reporting due in Australia?
A. You must lodge a fringe benefits tax (FBT) return if, for the FBT year (1 April to 31 March 2025), you: have FBT payable on fringe benefits you provided to your employees?
In Australia, employers must pay Fringe Benefits Tax (FBT) at a 47% rate on certain employee fringe benefits beyond regular pay. A fringe benefit is a payment to an employee, but in a different form to salary or wages.
However, employee Gift Cards can often be tax-free for employees and exempt from FBT as well as super surcharges & payroll tax for the business.
Q. Why should businesses use gift cards for employee incentives?
A. Gift Cards can be covered under the ATO Minor Benefit Exemption.
The Minor Benefit Exemption offers a fantastic opportunity for businesses to provide tax-free gifts to their employees.
When employers purchase vouchers or gift cards for employees, broadly gifts need to be valued at less than $300 to fall under the Minor Benefit Exemption, these gifts also need to be issued on an infrequent or irregular basis.
Q. Is there any better way to minimise FBT compliance for your business?
A. Use a digital gift card platform like MicroGifts that offers full transaction reporting.
MicroGifts full transactions reporting shows the detail of every gift sent, the recipient’s name, date sent, & amount. Reporting is simply a matter of running a custom date report on the platform and downloading to excel.
Generally, finance teams request admin or Human Resources to provide a full list of FBT payments in April each year. Both Admin & Finance love a simple accurate spreadsheet.
Q How do I maximise the opportunity to for FBT free staff incentives?
A. Follow some quick guidelines below.
· Keep Gift Card values under $300
· Give them out infrequently or irregular basis like Christmas, Birthdays or special awards.
· Avoid entertainment gifts like movies or sporting tickets, as they don’t fall under the exemption.
· Provide long service awards up to $1,000 (see ATO FBT Guidelines for details).
Q. Why do employees prefer gift cards?
A. Employees prefer gift cards as a convenient and great alternative to bonuses and physical gifts.
· Tax-friendly – often exempt from income tax of up to 47%,
· Full Value – employees receive the total value of their reward unlike, unlike company staff bonuses.
· The value is kept separate as a bonus away from recurrent income bank accounts.
With the MicroGifts Platform you can easily build an effective reward and recognition program without any IT or upfront costs which allows full tracking with simple FBT reporting on annual Employee benefits in one report.
If you would like to learn more, call us now on 1300 000 889 or Request a Quote.