FocusOn - Tax free minor benefits

Employers can now provide minor and infrequent benefits, valued less than $300, to employees. They are tax free to the employee and exempt from FBT. A minor benefit is defined as one that is provided infrequently and irregularly.

Previously, the limit was $100 but the new $300 limit gives employers more freedom in giving benefits to employees and their spouses, by purchasing tax-free gifts. Why not consider a gift voucher instead of a performance bonus?

At Christmas time

If gifts are distributed at the Christmas party this is included in the $300 minor benefit limit. However if gifts are distributed on another occasion they are not included in the $300 benefit. For this reason it may be more tax effective to give gifts on another occasion.

If you do decide to distribute gifts at Christmas consider giving one that is tax deductible and exempt from FBT. Some examples include:

	Tools of trade (eg hand tools)
	Briefcase
	Calculator
	Electronic Diary
	Notebook or laptop computer
	Subscription to a trade journal

Note: There is a limit of one laptop per employee per FBT year.

Additionally, employers can now spend up to $300 per employee on a Christmas party without incurring any FBT tax.

In-house fringe benefits

From 1 April 2007 the ‘in-house’ fringe benefits exemption threshold was doubled to $1,000. This means that you can provide more goods to your employees at a discount.

Published : 17 December 2007