Gifts and small incentives for employees
Guidelines for managers
This guideline is provided to assist managers when using gifts and
small incentives to reward or recognise employees for exceptional
performance or above normal expectations. The guidelines identify fringe
benefits tax implications associated with the provision of gifts and
small incentives to employees.
Gifts and small incentives for employees that are under $300 in value
and are not frequently provided may be classed as a minor benefit by the
Australian Taxation Office (ATO). A minor benefit is exempt from fringe
If a gift or small incentive is not defined as minor they are an
expense benefit and subject to fringe benefits tax. The ATO does not
provide a precise definition but they do provide examples of what may or
may not be classed as a minor benefit.
2. Broad criteria
If a chosen gift or small incentive is not clearly covered in the
following section, further advice can be sought from the Finance
The criteria for deciding if a gift or small incentive falls into the
ATO's description of a minor benefit should be based on the following:
- The frequency and regularity with which similar or identical
benefits are provided. For example, the more frequent and regular a
benefit is provided, the less likely it is to qualify as an exempt
- The greater the cumulative value of the gift or small benefit
over a year, the less likely it will qualify as exempt benefit.
- The circumstances in which the minor benefit and any associated
benefits were provided and if it could be considered principally as
being in the nature of remuneration.
Managers will need to take into account the effect fringe benefits
tax may have on their cost centre.
3. Taxation department determinations
Guidance as to how the criteria applies in practice can be obtained
by reference to the following examples which are taken from the two
Taxation Determinations (TD 93/197 and TD 93/76) and section 58P of the
Fringe Benefits Act:
- It is common practice for employers to give employees gifts at
Christmas time. A single gift to each employee at Christmas time of,
say, a bottle of whisky or perfume would be an exempt minor benefit,
provided the value of each was modest. However, if some employees
were given a range of gifts of which only some were of modest value,
e.g. expensive art works, food hampers and wine, it would be
necessary to look at the package of associated benefits rather than
each individual item.
- The occasional use of an employer's vehicle by an employee for a
special purpose such as rubbish removal or for travel from home to
work during a transport strike are exempt benefits provided the
employee in question did not have a general entitlement to use the
vehicle for private purposes.
- A one-off loan of a four-wheel drive vehicle to enable an
employee to travel cross-country during an extended annual holiday
break may not be exempt because the actual value of such a benefit
is not small. The value would be determined by the cost of hiring
such a vehicle for the time required.
4. Examples of gifts provided to employees that may qualify as a
- Stationery that an employee is permitted to use for private
- The use of office staff to type essays or assignments.
- Flowers to the value of $40 sent to an employee on the birth of
his or her child is an exempt minor benefit as it is a singular
- Gift baskets not exceeding $300.
- A University corporate gift to the value of $300.
5. Examples of a gift or small incentive not classed as a minor
- Redeemable vouchers awarded to staff on a regular basis as an
ongoing incentive scheme, due to the frequent nature.
- Flowers sent to a member or members of staff on a frequent or
- A pram valued at $500 provided to an employee on the birth of
his or her child is not an exempt minor benefit as the notional
taxable value is not small.
- Gifts for monthly improved or additional labour or a monthly
sales incentive award are not minor benefits due to the frequency of
- Meals and morning tea activities are classed as entertainment
expenses and subject to FBT.
- Movie passes provided on an adhoc basis.
6. Fringe benefits tax
It is important to note that should a benefit attract FBT, the
respective cost centre will be charged this cost. Please note, where FBT
is attracted the total expense may be doubled.
Fringe benefits tax is calculated on the taxable value of the
benefits provided and is payable by the University. The taxable value is
the gift or small incentive plus any associated benefits that may also
be provided with it. For example, an 'accommodation package' may also
include the travel fares, meals and telephone calls; therefore the total
amount becomes the taxable value.
Rewards and recognition of a monetary nature should be in line with
ATO guidelines, they should be irregular in nature and no higher than
$300 in value per individual. Whilst tangible monetary rewards or
benefits should not be regular, the reason for the reward and type of
reward should be consistently applied.
Recommendations should be submitted to the manager of the relevant
Division/School/Unit/ Portfolio/Institute and rewards should be for
exceptional performance or above normal expectations. It is also
recommended that before rewards are applied, advice is sought from
external parties, for example People Talent and Culture, Finance and Pro Vice
It is important to remember that all rewards and recognitions of the
nature described in these guidelines should be consistent in their
application but not regular in frequency.