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Gift cards for employees

Newbie

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If we buy gift cards for employee (say $500 per employee), do we pay FBT on that? Or any type of tax on the gift cards?

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Taxicorn

Replies 2

@danhendo888 

Non-entertainment gifts given to staff (including working directors) are usually exempt from FBT where the total cost is less than $300 inclusive of GST per staff member.

 

Gift vouchers fall into the non-entertainment category.

 

A tax deduction and GST credit can also be claimed.

 

The $300 minor benefits exemption also separately applies to any gifts provided to associates meaning that a similar gift can also be provided to a spouse or partner of the staff member with the same favourable tax outcome.

 

Providing employees “non-entertainment gifts” of $300 or more GST inclusive is less tax effective. A tax deduction and GST credit can still be claimed, but FBT is payable at the rate of 49 per cent on the grossed-up value (currently 2.0802).

 

Entertainment expenditure incurred in relation to non-employees (i.e. customers, clients, etc.):

  • NOT subject to FBT;
  • NO income tax deduction; and
  • NO GST credit available.

 

https://www.ato.gov.au/law/view/document?DocID=SAV%2FFBTGEMP%2F00021

3 REPLIES 3

Most helpful response

Taxicorn

Replies 2

@danhendo888 

Non-entertainment gifts given to staff (including working directors) are usually exempt from FBT where the total cost is less than $300 inclusive of GST per staff member.

 

Gift vouchers fall into the non-entertainment category.

 

A tax deduction and GST credit can also be claimed.

 

The $300 minor benefits exemption also separately applies to any gifts provided to associates meaning that a similar gift can also be provided to a spouse or partner of the staff member with the same favourable tax outcome.

 

Providing employees “non-entertainment gifts” of $300 or more GST inclusive is less tax effective. A tax deduction and GST credit can still be claimed, but FBT is payable at the rate of 49 per cent on the grossed-up value (currently 2.0802).

 

Entertainment expenditure incurred in relation to non-employees (i.e. customers, clients, etc.):

  • NOT subject to FBT;
  • NO income tax deduction; and
  • NO GST credit available.

 

https://www.ato.gov.au/law/view/document?DocID=SAV%2FFBTGEMP%2F00021

Newbie

Replies 1

Hi

Can someone provide ATO information on whether non entertainment gifts under $300 (to both employees and clients/suppliers) are tax deductible and GST credit claimable if applicable? 

The link that has been provided in this thread shows that the above is not subject to FBT, but it would seem that if it is an exempt benefit it is also not tax deductible?

Community Support

Replies 0

Hiya @Bree,

 

The information you are looking for is section 1.6 (GST) and 1.7 (income tax) of the fringe benefits tax guide for employers.

 

What it says (in a nutshell) as long as any of the normal exemptions don;t apply for GST. I.E. It's not an input-taxed or GST free transaction.

 

For deductions, generally the cost of providing the benefit is tax deductible. There is some special rules for employee contributions, but I don't think that applies to your situation.