What is FBT?
The ATO can be a little vague in describing Fringe Benefit Tax (FBT): “FBT is paid by employers on certain benefits they provide to their employees or their employees’ associates (typically family members) in respect of the employee's employment. FBT is separate from income tax and is based on the taxable value of the fringe benefits provided”.
Put simply, any items that are provided by your employer - which are not in the form of your normal salary - are known as fringe benefits. So, they are still considered types of income – which is why they incur FBT. The good news is only a handful of items actually attract this tax.
Minor or major benefit?
Whether FBT will be charged or not boils down to a number of factors. First, consider whether the gift can be considered a "minor benefit”. That’s when the gift is less than $300 and it’s provided to employees on an infrequent basis. A minor benefit isn’t subject to fringe benefits tax (FBT).
John Corias from MAS Accountant says: "Provided that these gifts are infrequent and not overly excessive in value, these gifts provided to employees are usually an acceptable income tax deduction and GST credits can also be claimed, where applicable. These include flowers, wine, perfumes, and gift vouchers and so on. Such gifts are classified as non-entertainment gifts and when given to staff members do not fall within the FBT rules."
So if you buy a $200 gift for your employee once a year, it’s likely to be considered a minor benefit. But if you do this once a month, it’s likely that this would be considered frequent and regular – and thus subject to FBT.
Similarly, if you buy a GoPro HD Hero3+ Action Video Camera for $399, this is likely to be subject to FBT (as it exceeds $300). But if you buy a GoPro lookalike – like Kogan's Action Camera 3+ for $159 – it’s not likely to be subject to FBT.
The $300 rule
In other words, when it comes to gadgets, stay under the $300 rule and you are pretty safe that you won’t be hit with FBT provided you’re not lavishing pressies on your team too often. But please note that the rules are totally different if the gift is considered “entertainment” (like footy tickets, plane trips, or theatre subscriptions) but that’s a whole other story! They may or may not be exempt; you need to consult your accountant.
So if you’re keen to spoil you staff with some cool gadgets this silly season, here are our top picks.
1. Fitbit Charge
Reward staff while encouraging them to look after themselves with the Fitbit Charge. It tracks steps, distance, calories burned, floors climbed, active minutes and sleep – all in real time. While there are many wearable devices on the market, Fitbit remains a popular choice with various models to choose from. The new Charge model has a rechargeable battery that claims to last seven to 10 days.
2. Pebble Watch
If your team can’t wait for Apple’s iWatch to hit the market in 2015, give them their Dick Tracy fix with the Pebble Watch. It syncs with smartphones (Android or iPhone) and staff can download apps so that their watchface displays incoming emails, texts, and everything from the stock price to the weather. It can also be used as a remote trigger for their smartphone camera and more.
From RRP $129
3. Livescribe 3 Smartpen
For the productivity pros in the building, The Livescribe 3 Smartpen is a pen that can record audio at meetings, lectures or presentations. Staff can also take notes in a special spiral notebook that syncs hand written notes with an audio recording. If they want to hear the audio, they simply touch their Smartpen on their handwritten notes for play back.
4. Google Chromecast
Google Chromecast is set to be a popular secret Santa stocking filler in offices around the world this season. Similar in size to a thumb drive, it’s a media streaming device that works with Android phones, tablets, iPhones, iPads, Mac or Windows laptops, or Chromebooks to broadcast straight from your app to the screen. The beauty is that it’s portable and plugs into any TV with an HDMI port so gift recipients are not locked into a particular TV. And if Google Chromecast owners need to stop watching the telly halfway, they can keep watching from where they left off on their device.
A steal at RRP $49.95.
5. Kobo Arc 7HD
For avid content consumers, this black Kobo Arc 7HD tablet is great for books, movies, music or games. For those who don’t want to be locked into Amazon's Kindle, it boasts more than 4-million titles through the Kobo store and the Google Play platform.
6. Canon Selphy CP910
Believe it or not, now you can print selfies on a Selphy. A hit at Christmas parties, the Canon Selphy is a small printer your team can use to print photos wirelessly from their phone or camera. And in case they’re not the world’s best snappers, it even automatically adjusts tone, brightness and contrast so that selfies are worth sharing.
All wrapped up
A gadget under $300, gifted as a yearly one-off, gives business owners and staff the best of both worlds. Stick to gifts under $300 to avoid paying FBT and go for tech products that boost productivity at work, and in daily life, for a gift your team will enjoy long after the Kris Kringle buzz has worn off.
Want to learn more about FBT?
The ATO has put together a short video to explain the ins and outs in futher detail. Watch it here.Find out more
All prices correct at the time of publishing