FBT Q&A – Gifts to long serving employees

FBT, Public
Author: Steve Griffiths
1 Mar 2018

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.

This article provides a general summary of the subject covered as at the date it is published. It cannot be relied upon in relation to any specific instance. TaxEd Pty Ltd and any person connected with its production disclaim any liability in connection with any use. It is not intended to be, nor should it be relied upon as, a substitute for professional advice.

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