FBT Q&A – Gifts to long serving employees

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Question

Could you please confirm whether a gift worth $800 provided to a long serving employee is exempt from fringe benefits tax.

Answer

When recognising long service of an employee, non-cash awards to employees in recognition of services of not less than 15 years are an exempt benefit – refer section 58Q of the FBTAA. It is noted a payment in cash form would simply be considered salary or wages.

To qualify for the exemption the following conditions must be satisfied:

  • A long service award benefit must be provided to an employee.
  • The award is for a recognised long service period.
  • Notional taxable value of the award must not exceed the threshold.
  • Threshold calculation where there is only one recognised long service period.
  • Threshold calculation where there is more than one recognised long service period.

The exemption limit is set as follows:

$1,000 + ($100 × (RLS − 15))

RLS is the number of whole years of service so essentially the exemption is $1,000 for the first 15 whole years of service plus $100 for each additional whole year of service after that.

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