FBT & Gift Cards

December 9, 2025

There is a proposed change in action for how gift cards are treated in the world of tax – and whilst it isn’t gospel just yet – it is set to be enacted by 31 March 2026 and will be backdated to 1 April 2025, which means it will affect any gift cards you have purchased for your team for Christmas.

Here is what is proposed:

If your business gives gift cards to staff — for Christmas, birthdays, long service, or just as a “thank you” — there’s one big change you need to know:

All gift cards are now fully subject to Fringe Benefit Tax (FBT).
The old $300 tax-free threshold no longer applies to gift cards.

This rule covers every type of gift card: supermarket vouchers, retail store cards, Visa/Prezzy cards, digital gift cards — everything.

Here’s what it means in simple terms.

Why Gift Cards Now Attract FBT

Inland Revenue has updated its view on how gift cards should be taxed. Previously:

A $200 supermarket voucher was usually FBT-free (because it fell under the $300 “minor benefits” exemption).
A $200 Visa/Prezzy card was considered like cash, so it should have gone through PAYE.

This caused confusion — so IRD decided to treat all gift cards the same moving forward.

New rule (from 1 April 2025):

All gift cards = Fringe benefits = FBT applies from the first dollar.

No exemptions. No $300 threshold. No loopholes.

Some examples:

1. Christmas Gift Cards

Your business gives each staff member a $150 Farmers gift card for Christmas.

Before:
Likely covered by the $300 exemption → No FBT.

Now:
Full FBT applies.
Depending on your rate, this could cost the business around $90 in FBT.

2. Gift Card Given Instead of Cash Bonus

You give an employee a $300 gift card instead of a $300 cash bonus.

Important:
If the gift card replaces salary or wages, it must go through PAYE, not FBT.

So:

In lieu of salary → PAYE
As a perk / reward → FBT

We will look out for these changes and will let you know in a future newsletter when this change has been passed and becomes legislation.