Holiday Gift Cards: Are They Taxable to Employees?

The holiday season is upon us, and many businesses are considering giving gifts to their employees as a way to show appreciation for their hard work and dedication. However, there may be tax implications to consider when it comes to these gifts.

One question that arises is whether minor benefits, such as gift vouchers or hampers, are taxable to employees. According to the Australian Taxation Office (ATO), the $300 minor benefits exemption also applies to any gifts provided to associates. This means that if the total cost of the gift is less than $300 inclusive of GST per staff member, it is usually exempt from fringe benefits tax (FBT).

In addition, non-entertainment gifts that cost less than $300 are fully tax deductible with no FBT payable. However, there are certain criteria that must be met in order for a benefit to qualify as a minor benefit. These include:

* The cost of the benefit is less than $300 per person

* The benefit is not considered a reward for services

* The benefit is provided on an infrequent or irregular basis

* The benefit is provided to staff or their associates, such as their spouse or partner

If these criteria are met, then the gift is considered a minor benefit and is exempt from FBT. However, if the cost of the gift exceeds $300 per person, or if it is considered an entertainment expense, then FBT must be paid.

So, can an employer give a gift to an employee? Yes, but there may be tax implications to consider. In any normal year, December is a month of festivities, with workplaces around the country holding end-of-year celebrations and parties on a massive scale. However, this year may look different due to restrictions on venues and gatherings.

In summary, holiday gifts that cost less than $300 per staff member are usually exempt from FBT and are fully tax deductible. However, there are certain criteria that must be met in order for a benefit to qualify as a minor benefit. By understanding the tax implications of these gifts, businesses can ensure that they are showing their appreciation for their employees while also staying on the right side of the law.

Holiday gift cards taxable to employees