Christmas Gifts for your Team


Employers may want to reward their employees with gifts during the holiday season but may be concerned about whether fringe benefit tax (FBT) applies.


Gifts or promotions provided to employees are tax deductible as long as they do not exceed the maximum employer exemption figure for FBT. At the moment this figure is $300 per employee per quarter with a maximum of $22,500 employer exemption per year. If these amounts are exceeded, then employers will need to pay FBT on the total value of benefits.


Businesses should note that this 100% exemption does not apply for in-work celebrations, food or entertainment provided to employees. In the case that the Christmas reward provided to employees is some sort of food or entertainment, whether consumed on premises, at a local restaurant or hotel, the regulations only allow a deduction of 50%.


Businesses may opt to give their employees Christmas bonuses. Although these are fully tax deductible, they will receive a PAYE deduction at the employee’s marginal tax rate.


Therefore, employers are able to reward their employees for their hard work throughout the year without taking a big financial penalty.


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