Gifts to Staff

Christmas is traditionally a time of giving – including employers showing gratitude towards staff and clients/suppliers for their loyalty throughout the year. With the right approach, it is possible to enjoy some tax benefits from your generosity and avoid Fringe Benefits Tax (FBT). But as always with tax, the landscape is layered with complexity. The following is a general summary of the tax treatment of Christmas giving (staff gifts). 

Non-entertainment gifts to staff (such as Christmas hampers, bottles of alcohol, gift vouchers, pens sets etc.) are tax deductible and you can claim GST credits, irrespective of cost. Note however that you can generally avoid FBT if you keep the gift under $300.  If this threshold is exceeded, FBT will apply. Therefore, be conscious of this threshold when providing such gifts to staff this Christmas. 

Entertainment gifts to staff (such as tickets to movies/theatre/amusement parks/sporting events, holiday airline tickets etc.) which are under $300 will not attract FBT, but are not income tax deductible, and you can not claim GST credits. If over $300, FBT will apply, but a tax deduction and GST credits can be claimed. With FBT rate sitting at 47% the tax deduction and GST credits  available is unlikely to provide a better tax outcome than avoiding FBT by keeping the gift under $300.