Corporate gifts are a great way to recognise employees, thank clients, and mark special occasions like Christmas or business milestones.

But while generosity is encouraged, it’s important to understand the tax implications – especially when gifting to employees.

Here’s what New Zealand businesses need to know to stay compliant while spreading goodwill.

Are Gifts to Employees Taxable?

Yes – in many cases, gifts to employees are subject to fringe benefit tax (FBT) or PAYE, depending on what’s given.

Non-Cash, Non-Convertible Gifts

These are physical items like:

• Gift hampers
• Branded umbrellas
• Bottles of wine
• Movie tickets

Tax treatment:

If the total value stays under $300 per employee per quarter and under $22,500 per year across the business, these gifts may qualify for the FBT de minimis exemption.

Note; the de minimis threshold is a test – not a partial exemption – so if over the threshold, FBT applies to the total gift, not the amount over the threshold.

If the gifts are over the FBT thresholds, note that FBT will apply, and not PAYE.

Cash or Cash-Convertible Gifts

Includes:

• Prepaid Visa or Mastercard gift cards (usable at ATMs)
• Reloadable debit cards
• EFTPOS or bank-issued gift cards with cash access

Tax treatment:

These are treated as income and must go through payroll with PAYE deducted. They do not qualify for FBT exemptions.

Gifts in Lieu of Bonuses

Any gift given in place of a cash bonus or directly tied to performance is considered remuneration and is fully taxable.

In short:

If the gift can be redeemed for cash, it’s always taxable.

Are Christmas Gifts to Staff and Corporate Gifts to Clients Tax Deductible?

Christmas Gifts: Festive Giving with Smart Tax Planning

Holiday gifting is a tradition for many businesses – but remember, not all gifts are treated equally for tax.

Gifts to Employees

• Follow FBT rules
• Keep non-cash gifts under thresholds to remain exempt

Corporate Gifts to Clients or Suppliers

• Entertainment gifts (e.g. wine, restaurant vouchers): 50% deductible
• Non-entertainment gifts (e.g. branded merchandise, books): 100% deductible

Tip:

Clearly document who the gift was for, what was given, and its cost.

Are Gift Cards Tax Deductible?

When it comes to rewarding staff or clients, not all gift cards are treated the same for tax purposes – the key is whether the card can be converted to cash.

Which Gift Cards Are Acceptable?

The rules are straightforward once you know what to look for – here’s how to tell if your gift card is likely to be tax-exempt.

Not Redeemable for Cash – Exempt (if under limits)

• Countdown gift cards
• Woolworths gift cards
• Pressie Cards (GiftStation)
• Westfield Vouchers

These can’t be cashed out and are generally treated as non-cash gifts.

Redeemable for Cash – Taxable

• Prepaid Visa/Mastercard (usable at ATMs or online)
• EFTPOS debit gift cards
• Any reloadable or cash-transferable card

Frequently Asked Questions

Can I give my staff a cash bonus?

Yes you can, but it must be run through payroll and have PAYE deducted. It is therefore treated in the same way as regular pay and forms part of your employees’ taxable income.

Can I give staff a $100 supermarket gift card at Christmas without triggering tax?

Yes, as long as they are not able to be redeemed for cash e.g. Woolworths and Countdown gift cards, Pressie Cards and Westfield Vouchers all meet this criteria. If you are looking at other gift cards, please confirm that they cannot be redeemed for cash.

Are corporate gifts to clients tax deductible?

Yes, in most cases – but if the gift includes food, drink, or entertainment (e.g. a dinner voucher), the deduction is limited to 50%. Non-entertainment gifts may be 100% deductible.

What are unclassified fringe benefits?

These are non-cash benefits given to employees (like gift baskets or movie tickets) that fall outside other FBT categories. They may be exempt if they stay under the de minimis thresholds.

Do I need to register for FBT if I give small gifts occasionally?

Not necessarily. If your gifts to each employee stay under $300 per quarter and under $22,500 across the business annually, you may not need to register – but keep track to avoid exceeding the limits.

Can I claim GST on corporate gifts?

Yes – if the gift is deductible for income tax purposes and GST has been charged, you can usually claim the GST. However, remember that 50% limits also apply to GST on entertainment gifts.

Need help navigating corporate gift rules?

At ABA, we help businesses make informed decisions around corporate gifts – ensuring compliance while still recognising the value of generosity. Whether you’re planning end-of-year gifts, milestone rewards, or regular employee incentives, we’ll help you get the tax treatment right.

Contact us today for advice on managing FBT, PAYE, and claiming deductions correctly.