Unclassified Benefits $300 / $22,500 Limits
Unclassified benefits $300 / $22,500 limits are Inland Revenue’s two tests for when fringe benefit tax starts on free gifts, prizes, subsidised goods or services, and gift cards you treat under the FBT rules. You only pay FBT once the taxable value is more than a limit. There is a per employee line and an annual line for all employees. If the taxable value is less than or the same as those limits, you do not pay FBT.
If you are over a limit, FBT is on the full amount that fails the test, not only the extra dollars. Quarterly per employee is $300. Income year or annual per employee is $1,200. All employees is $22,500. Stay at $300 exactly and that person can still sit outside FBT, as long as the $22,500 test also holds. This page is the limit map. Dollar rate maths still sit on the calculator.
What are the live limits?
Inland Revenue’s limits for fringe benefit tax on unclassified benefits and gift cards page, and Part 3 of IR409 2026, use the same three figures. Blogs that talk about a $200 replacement are talking about a consultation idea, not the live test.
| Test | When it applies | If you go over |
|---|---|---|
| $300 per employee | Each quarterly return period | FBT on that employee’s full taxable value for the quarter |
| $1,200 per employee | Income year or annual return period | FBT on that employee’s full taxable value for the period |
| $22,500 all employees | Last 4 quarters including the current quarter, or the income year or annual period. The 4 quarters do not need to sit in the same year. | Quarterly: FBT on the total provided in the current quarter. Income year or annual: FBT on the full amount provided in the return period. |
Inland Revenue: if the taxable value of unclassified benefits and gift cards is more than the per employee or annual limit, you must pay FBT on the full amount. It is not a tax on the extra $1 only. $300 exactly still fits the per employee line because the page says less than or the same as.
How do gift cards sit in the $300 and $22,500 tests?
Gift cards include vouchers. Inland Revenue’s types of unclassified benefits and gift cards page: retailer specific cards can only be used with the retailer named on the card, and FBT rules apply. General use cards can be used at multiple retailers, and PAYE rules apply, meaning the grossed up value is added to salary or wages. From 16 April 2025 you can choose to apply the FBT rules to all gift cards and vouchers.
Gift cards are a classified benefit. They are still treated the same as unclassified benefits for working out whether you are over the limits. If you use the FBT rules, include the value of the gift card with any other unclassified benefits you provide. IR409: for gift cards, the taxable value is the amount loaded on the card. GST on selling a voucher to a customer is a different clock on GST on vouchers and gift cards.
From 1 April 2026, Inland Revenue lets you choose FBT or PAYE when you reimburse an employee’s personal expense that would have been an unclassified benefit if you had provided it directly. If the reimbursed amount is the same as or below the limits, you do not need to pay FBT or deduct PAYE. Who registers and files IR420 sits on FBT for employers.
Taxable value for unclassified benefits is the GST inclusive fringe benefit value, minus any employee contribution you have not reimbursed. That is the number you compare to $300, $1,200, and $22,500. Price one quarter’s taxable value on the FBT calculator after you know the amount is in.
What Inland Revenue’s Nicole and Bailey example does
IR409 and the limits page use the same labelled pair in a March quarter 4 return. Benefits to Nicole total $195. That is not more than $300. No FBT for Nicole. Benefits to Bailey total $500. That is more than $300 and FBT applies to the full $500. The employer still puts both people in the worksheets. Only Bailey’s unclassified benefits are taxed. If Bailey contributed $200, taxable value is $300, the limit does apply, and no FBT would be payable.
Inland Revenue rolling $22,500 (quarterly)
June quarter $6,000, plus March $8,000, December $8,000, September $3,000. The four quarter total is $25,000, which is over $22,500. FBT is on the full $6,000 in the June quarter, not on the $2,500 above the line, and not on the earlier three quarters again. Group companies: $9,000 plus $8,000 plus $7,000 is $24,000. Every company in the group pays FBT on the benefits it provided to its own staff.
Total benefits for the $22,500 test include unclassified benefits and gift cards you provide, those provided by your associated persons to your employees, benefits you provide to employees of associated persons, and, if you are a company, benefits provided by other companies in your group. Categories for associated persons’ staff and group companies count for the limit. On the return you only pay FBT on unclassified benefits and gift cards provided to your own employees.
If the income year return period is shorter or longer than a normal year, Inland Revenue adjusts the $1,200 and $22,500 lines: (number of days in the return period divided by 365) times the usual limit. That is for starting, stopping, or changing filing frequency part way through the year.
What stays out of the $300 pile
When an exemption or exclusion applies, do not include those benefits in the FBT return calculations. Keep the records. Inland Revenue’s exemptions and exclusions for unclassified benefits page lists charitable activity (watch short term charge facilities), health and safety risk management such as flu vaccinations and PPE, certain public transport and employer provided bikes and scooters, distinctive work clothing, some on premises car parks, and some membership reward schemes the employee joined for their own use.
The health and safety exemption does not apply to gym subscriptions or employer paid health insurance premiums. Unclassified still covers free gifts, prizes, and subsidised club memberships. Entertainment can sit here when the employee does not receive or use it in the course of their employment, it is not a necessary consequence of their employment, and they can choose when to enjoy it, or it is enjoyed outside New Zealand. Staff function GST often sits on GST on entertainment expenses.
A company can treat unclassified benefits or gift cards given to a shareholder employee as dividends instead of FBT. Tell Inland Revenue in myIR before the FBT return due date, including the return period. Paper filers include a note. If you do not tell them, they treat the amount as a fringe benefit.
Attribution is a different clock. Inland Revenue: the annual taxable value for attributing unclassified benefits and gift cards to individual employees is $2,000. That is for full or pooled alternate rate work, not for whether the $300 or $22,500 limit already put the amount into FBT. Rate choice after a limit fails sits on single 63.93% vs alternate 49.25% and Q4.
Use case: Hamilton cafe, $250 Prezzy cards
Situation: labelled Hamilton Ltd. Quarterly FBT. Two floor staff each get a $250 general use card in the December quarter and nothing else unclassified. Year to date for all staff is well under $22,500.
Action: $250 is not more than $300. If you choose the FBT rules from 16 April 2025, both people can sit outside FBT this quarter. Put their names on the worksheet anyway. Do not treat the card as tax free commission.
Use case: Auckland group Christmas
Situation: labelled Auckland group of three companies. Each company stays under $300 a person. Combined unclassified and gift cards for the group sit at $24,000, matching Inland Revenue’s group example.
Action: the $22,500 line is applied across the group. Each company pays FBT on the benefits it gave its own staff. Tracking one company’s $300 list is not enough.
Use case: Tauranga hamper over $300
Situation: labelled Tauranga employer. One person receives $500 of goods in the quarter. A second person receives $195. No staff contribution.
Action: copy Inland Revenue’s pair. $195 stays out. FBT is on the full $500, not on $200. If the $500 person later pays $200 toward the goods, taxable value is $300 and the per employee limit can still apply.
What people get stuck on
r/newzealand asked why a sales commission paid in Prezzy cards looked tax free. It is not a free wage. If you use FBT, the loaded amount goes into the $300 and $22,500 tests. If you use PAYE on a general use card, it is employment income. r/PersonalFinanceNZ treated a one off gift card as “not going to matter” and also posted the $300 / $22,500 pair. Inland Revenue still wants the worksheets and the records. r/nzbusiness pointed a gym membership question at IR409. Gym subscriptions are not in the health and safety exemption.
Calculate.co.nz’s de minimis tool is right that both tests must hold, and wrong if it reads as “any breach taxes every unclassified benefit in the business.” Inland Revenue’s Nicole example still sits outside when only Bailey is over $300. Employment Hero’s “one dollar over and the whole lot is taxable” line needs the same split: that person’s full amount, or this quarter’s full amount on a $22,500 breach. CMK’s farm gift card note matches the FBT choice for cards, then quotes a stale FBT rate and the wrong return code. Use IR420 and the live 63.93% or 49.25% path. Grant Thornton’s $200 infrequent benefit idea is a proposal, not the live $300 / $22,500 pair. Quora and Medium hits this run were US IRS gift cards and UK trivial benefits. Drop those.