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Sam.dadoush(Newbie)Newbie
8 Apr 2026

Dear ATO Team,

We are a fashion retail company operating in Australia. Our business model involves purchasing goods from overseas suppliers and reselling them through our Australian retail stores.

We currently provide employees with two types of in-house gift cards:

  1. Clothing allowance (not uniforms, but general apparel)
  2. Occasional gift cards (e.g., for recognition or special events)

These gift cards are restricted for use within our own retail stores only and cannot be redeemed with external retailers or exchanged for cash.

For completeness, the gift cards are provided as stored-value cards (fixed dollar amounts) and can be redeemed by employees for merchandise sold by our business in-store only. Employees are also entitled to a 40% staff discount on purchases.

The clothing allowance is provided [Removed by moderator] times per year, with a fixed value per issuance.

We would appreciate your guidance on the Fringe Benefits Tax (FBT) implications of these arrangements. Specifically:

  1. Do these gift cards constitute in-house property fringe benefits?
  2. If so, should the taxable value be determined under the rules for goods purchased and sold in as part of the employer’s business, meaning the taxable value is the lower of:
    • The arm’s length purchase price to the employer, or
    • The market value of the goods?
  1. Alternatively, do these benefits fall under the $1,000 in-house fringe benefits reduction provisions?
  2. Are there any differences in FBT treatment between the clothing allowance and occasional gift cards?
  3. Could these benefits qualify for the minor benefits exemption where the value of individual benefits is less than $300 and provided on an infrequent and irregular basis?


Kind regards

203 views
1 replies
203 views
1 replies

Most helpful response

Most helpful reply

JayATO(Community Support)Community Support
9 Apr 2026

Hi @Sam.dadoush,


Yes, the gift cards you're providing constitute in-house property fringe benefits. These are benefits where an employee receives goods that the employer sells in their ordinary course of business.


For in-house property fringe benefits, the taxable value is determined using specific valuation rules. The taxable value is the notional value of the benefit, which is generally the lowest of:

  • 75% of the arm's length price (the price a member of the public would pay)
  • the arm's length price less any employee contribution.

The staff discount of 40% your employees receive is already factored into this valuation method. The notional value cannot be less than the cost price of the goods to you as the employer.


You may be entitled to apply the $1,000 in-house fringe benefits reduction. This reduction applies to reduce the taxable value of in-house property and residual fringe benefits provided to each employee during the FBT year. The reduction is applied after calculating the taxable value of all in-house benefits for each employee.


The minor benefits exemption may also apply to individual gift cards where the taxable value is less than $300 and they're provided on an infrequent and irregular basis. This exemption is more likely to apply to your occasional gift cards for recognition or special events than the clothing allowance, which you provide multiple times per year at fixed values. The key test is whether the benefit is provided on an infrequent and irregular basis, considering all relevant circumstances.


You'll need to assess each benefit type separately. The clothing allowance provided multiple times per year at fixed values would likely not qualify for the minor benefits exemption due to the regular and frequent nature of the provision. The occasional gift cards may qualify if they meet all the exemption criteria, including the less than $300 threshold and the infrequent and irregular basis test.

All replies

Most helpful reply

JayATO(Community Support)Community Support
9 Apr 2026

Hi @Sam.dadoush,


Yes, the gift cards you're providing constitute in-house property fringe benefits. These are benefits where an employee receives goods that the employer sells in their ordinary course of business.


For in-house property fringe benefits, the taxable value is determined using specific valuation rules. The taxable value is the notional value of the benefit, which is generally the lowest of:

  • 75% of the arm's length price (the price a member of the public would pay)
  • the arm's length price less any employee contribution.

The staff discount of 40% your employees receive is already factored into this valuation method. The notional value cannot be less than the cost price of the goods to you as the employer.


You may be entitled to apply the $1,000 in-house fringe benefits reduction. This reduction applies to reduce the taxable value of in-house property and residual fringe benefits provided to each employee during the FBT year. The reduction is applied after calculating the taxable value of all in-house benefits for each employee.


The minor benefits exemption may also apply to individual gift cards where the taxable value is less than $300 and they're provided on an infrequent and irregular basis. This exemption is more likely to apply to your occasional gift cards for recognition or special events than the clothing allowance, which you provide multiple times per year at fixed values. The key test is whether the benefit is provided on an infrequent and irregular basis, considering all relevant circumstances.


You'll need to assess each benefit type separately. The clothing allowance provided multiple times per year at fixed values would likely not qualify for the minor benefits exemption due to the regular and frequent nature of the provision. The occasional gift cards may qualify if they meet all the exemption criteria, including the less than $300 threshold and the infrequent and irregular basis test.

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FBT Treatment of In-House Gift Cards Provided to Employees | ATO Community