A client recently gave a staff member a restaurant voucher for their birthday and asked me where to code it.
It's a simple gift, but there are a few tax rules worth knowing before you buy those Christmas presents.
𝐈𝐬 𝐢𝐭 𝐞𝐧𝐭𝐞𝐫𝐭𝐚𝐢𝐧𝐦𝐞𝐧𝐭?
Yes, but it's an exception to the usual rule.
Most entertainment is only 50% deductible. A voucher given to staff as a reward for their work is 100% deductible, but FBT (fringe benefit tax) may apply.
𝐃𝐨 𝐲𝐨𝐮 𝐡𝐚𝐯𝐞 𝐭𝐨 𝐩𝐚𝐲 𝐅𝐁𝐓?
Not if you stay within both limits:
• $300 or less per employee per quarter
• $22,500 or less for all employees per year
If you go over either limit, FBT applies to the full amount, not just the extra.
So before you buy that Christmas voucher, add up any other benefits you've given that employee this quarter.
𝐖𝐡𝐚𝐭 𝐚𝐛𝐨𝐮𝐭 𝐚 𝐏𝐫𝐞𝐳𝐳𝐲 𝐜𝐚𝐫𝐝?
A Prezzy card can be used at lots of shops, so by default IRD treats it like a cash bonus. That means PAYE applies, even on a small amount.
But since 16 April 2025, employers can choose to apply the FBT rules to all gift cards and vouchers instead. The same limits then apply as for the restaurant voucher.
𝐇𝐨𝐰 𝐭𝐨 𝐫𝐞𝐜𝐨𝐫𝐝 𝐢𝐭 𝐢𝐧 𝐗𝐞𝐫𝐨
I recommend creating a separate account in your chart of accounts, such as Staff Gifts.
Your Entertainment account is usually set up for 50% deductible expenses, so keeping staff gifts separate makes it easier to review and apply the correct tax treatment at the end of the year.
In the transaction description, note who the gift was for, what it was for and the value.
This is general information. Every business is different, so check your own situation before you buy.
Not sure how to treat your staff gifts this Christmas? Get in touch before you buy. It's much easier to get it right from the start than to fix it later.