In Australia, whether an employee gift is tax-free comes down to Fringe Benefits Tax (FBT), a 47% tax paid by the employer, not the employee, so it never shows up on a payslip. The main escape route is the "minor benefits exemption", but it isn't a simple price check: it's a two-limb test, and the second limb is where most employers slip up. This guide walks through the $300 exemption, how Christmas parties and gifts are actually taxed differently depending on where they happen, and a genuinely counterintuitive trap: successfully dodging FBT on a gift can mean losing the income tax deduction and the GST credit on that same spend. Plus 12 gift ideas that stay comfortably inside the rules.
The $300 minor benefits exemption: it's a two-part test
The ATO's minor benefits exemption keeps small, occasional benefits out of the FBT net, but only if both of the following hold:
- Limb 1 – Under $300 (GST-inclusive). The notional taxable value of the benefit must be less than $300 per benefit, per employee.
- Limb 2 – "Unreasonable" to treat as a fringe benefit. Even a benefit under $300 must also be unreasonable to treat as a fringe benefit, assessed against five factors: how often and regularly similar benefits are provided, the total value of associated benefits, how difficult the benefit would be to value and record, the circumstances in which it was provided, and whether it helped the employee do their job. In practice, frequency and regularity carry the most weight.
Being under $300 is not, on its own, enough. The ATO's own guidance contrasts two examples that make the point clearly: a $45 lunch provided to an employee every Friday is taxable, because giving it so regularly makes it unreasonable to treat as a one-off minor benefit, while a $105 bunch of flowers given once, say to mark a personal event, is exempt, because it's infrequent and irregular. A cheaper, frequent gift can fail the test that a pricier, one-off gift comfortably passes.
The $300 figure itself has not moved in the 2024–2026 window and is not indexed for inflation, it's a fixed statutory threshold rather than one that quietly rises each year.
Christmas parties: two different rules
Christmas gifting in Australia isn't governed by a single rule, it splits into two separate mechanisms depending on where the spending happens:
- Food and drink on the employer's business premises, on a working day, is exempt from FBT with no dollar cap at all. This sits under a separate provision from the minor benefits exemption, so there's no $300 ceiling to watch for an on-premises, working-day party.
- An off-premises party, or a gift given alongside or instead of one, falls back to the $300 minor benefits two-limb test above: under $300 in notional value, and infrequent enough to be unreasonable to tax.
The practical upshot: a Christmas lunch in the office is FBT-free at any cost, while the same lunch booked at a restaurant down the road is assessed under the $300 test instead.
The trap: FBT-exempt often means non-deductible
This is the part that catches employers out. Entertainment expenditure, including Christmas parties and many gifts, is non-deductible for income tax purposes in Australia, regardless of its FBT status. Successfully structuring a gift or party to be FBT-exempt does not make it a free lunch elsewhere in the tax return: it usually means the employer also forfeits the income tax deduction and the GST credit on that same spend.
Put another way, avoiding one tax (FBT) frequently means giving up two other benefits (the deduction and the input tax credit) on the identical expense. A $300 minor-benefit Christmas gift that clears the FBT exemption may still cost the business the full amount with no deduction and no GST credit to offset it, an outcome that's easy to miss if you're only checking the FBT box.
12 gift ideas
1. Hoodie – The Rex: a gift employees actually wear
A heavyweight organic cotton hoodie that comfortably fits within the $300 minor benefits threshold on its own, and one of the most popular gifting items in the catalogue.
- Material: 90% organic cotton, 10% polyester.
- Branding: embroidery, print, or patches.
- Order: MOQ 100 · from AUD 70/unit.
2. Sports Socks: the safe, low-cost favourite
A small, unexpected gift that always lands well, and leaves plenty of room under the $300 threshold to pair with something else.
- Material: 80% cotton, 17% polyamide, 3% elastane.
- Branding: knitted-in logo zones.
- Order: MOQ 100 · from AUD 7/unit.
3. Recycled Steel Bottle: everyday hydration
Vacuum insulation in recycled stainless steel, a gift that gets used and seen every day around the office.
- Material: recycled stainless steel.
- Branding: laser engraving or print.
- Order: MOQ 50 · from AUD 19/unit.
View the Recycled Steel Bottle →
4. A5 Notebook: FSC-certified paper
An A5 hardcover with elastic closure and ribbon marker, practical with a traceable material story.
- Material: FSC-certified paper, PU cover.
- Branding: debossing or print on the cover.
- Order: MOQ 100 · from AUD 8/unit.
5. Premium Tote Bag: the lightweight carry
A heavyweight cotton tote with a premium feel, everyday enough to actually get used long after Christmas.
- Material: 270gsm cotton.
- Branding: print or custom straps.
- Order: MOQ 100 · from AUD 11/unit.
6. Knitted Scarf: the cosy extra
A high perceived-value item that still sits comfortably within the $300 threshold.
- Material: 80% viscose, 20% polyester.
- Branding: woven label.
- Order: MOQ 100 · from AUD 13/unit.
7. Baseball Cap: the everyday accessory
An affordable, highly visible accessory that works all year round, not just over the holidays.
- Material: 100% cotton.
- Branding: embroidery.
- Order: MOQ 100 · from AUD 15/unit.
8. Espresso Mug: for the morning coffee
A compact espresso-sized mug, a small everyday object that sits on the desk long after the holidays end.
- Material: ceramic.
- Branding: print.
- Order: MOQ 108 · from AUD 15/unit.
9. Bamboo Tea Bottle: the natural choice
A bamboo exterior over a durable stainless steel interior, a warmer-looking alternative to an all-metal bottle.
- Material: stainless steel, bamboo.
- Branding: laser engraving or print.
- Order: MOQ 50 · from AUD 33/unit.
10. RollTop Backpack: the everyday bag
A water-resistant backpack with a laptop compartment that quickly becomes someone's everyday bag, still well inside the $300 minor benefits threshold.
- Material: GRS-certified recycled PU, water-resistant.
- Branding: print or embroidery.
- Order: MOQ 25 · from AUD 43/unit.
11. Noise-Cancelling Headphones: the premium pick
A higher-end gift that still leaves plenty of headroom under the $300 threshold, and makes a real difference to a busy workday.
- Material: recycled ABS, ANC + ENC, foldable.
- Branding: digital print or doming.
- Order: MOQ 50 · from AUD 43/unit.
12. Wireless Powerbank: useful everyday tech
A magnetic wireless powerbank in recycled ABS plastic, genuinely useful for any commute or business trip.
- Material: recycled ABS plastic.
- Branding: pad print or digital print.
- Order: MOQ 50 · from AUD 32/unit.
What about client gifts?
Gifts to clients and business partners sit outside the FBT system entirely, since FBT only applies to benefits provided to employees. What matters for client gifts is the entertainment vs. non-entertainment split:
- Entertainment-type gifts, event tickets, "experience" vouchers, club memberships, are non-deductible for income tax, and no GST credit can be claimed.
- Non-entertainment gifts, hampers, gift vouchers, flowers, chocolates, or a bottle of wine given as a standalone gift, are deductible, and the GST credit is claimable.
This is the key distinction to plan around for corporate gifting: a hamper or a branded gift sent to a client is a cleaner deduction than tickets to a game or a degustation experience, even though the latter might feel like the more generous gesture.
Common mistakes
- Assuming anything under $300 is automatically exempt. Frequency matters just as much as price, a cheap gift given regularly can fail the "unreasonable to treat as a fringe benefit" limb even while comfortably clearing the dollar threshold.
- Assuming an FBT-exempt gift is also tax-deductible. It's often the opposite: entertainment expenditure that dodges FBT typically forfeits the income tax deduction and the GST credit on the same spend.
- Giving a client an "experience" gift and assuming it's deductible like a hamper would be. Entertainment-type client gifts (tickets, experiences, memberships) are non-deductible with no GST credit, unlike non-entertainment gifts such as hampers or vouchers.
If you're setting up an ongoing employee gifting program rather than a one-off order, Sunday's employee gifting platform handles sourcing, branding, and delivery in one place.
Note: this article is a general explainer, not tax advice. Thresholds and rules can change, so confirm how they apply to your business with your accountant or the ATO.
This guide is part of our complete country-by-country series. See Employee Gift Tax Rules by Country: The Complete 2026 Guide for all 43 countries.
Order gifts for your team
Every product above is fully customisable with your branding and available in business order quantities. Browse the full range in the Sunday catalogue to put together a gift that stays within the minor benefits exemption. Sunday also supports enterprise-scale rollouts across multiple countries — see the full Sunday platform for details.
