ATO Interpretative Decision
ATO ID 2010/135
Fringe Benefits Tax
Property fringe benefits: gift cardsFOI status: may be released
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This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Where a retail store employer provides an employee with a gift card, has the employer provided the employee with an 'in-house property fringe benefit' as defined in subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)?
Decision
No. As the gift card provided to the employee is not 'tangible property' as defined in the FBTAA, the gift card does not satisfy the definition of 'in-house property fringe benefit' in subsection 136(1) of the FBTAA.
Facts
The employer operates retail stores. As part of the employer's business, gift cards are available for purchase by the public with a loaded value ranging from a minimum of $20 to a maximum of $500.
The employer recognises the efforts of employees who have worked diligently over a period of time or who have met particularly tight work project deadlines.
In recognition of an employee's work, the employer provides the employee with a gift card.
The value that is loaded on the gift card, up to the maximum of $500, is solely at the employer's discretion. The decision as to the stored value of the gift card was made prior to the gift card being provided to the employee.
The gift card can be redeemed at participating stores operated by the employer. The gift card can be redeemed for goods or services up to the stored value on the gift card within 12 months of its issue date. Any remaining stored value on the gift card at the expiry date will be forfeited.
Once the stored value of the gift card is redeemed, the gift card cannot be re-activated. That is, the gift card is not re-loadable.
The gift card cannot be refunded or exchanged for cash.
The gift card can be used by any person (bearer) who holds it. If the gift card is lost or stolen, it cannot be replaced and may still be used by whoever holds it.
Reasons for Decision
Section 40 of the FBTAA deals with 'property benefits' and states the following:
Where, at a particular time, a person (in this section referred to as the 'provider') provides property to another person (in this section referred to as the 'recipient'), the provision of the property shall be taken to constitute a benefit provided by the provider to the recipient at that time.
Subsection 136(1) of the FBTAA provides the following definitions relevant to property benefits:
'property' means:
'tangible property' means goods and includes:
- (a)
- animals, including fish; and
- (b)
- gas and electricity.
'intangible property' means:
- (a)
- real property;
- (b)
- a chose in action; and
- (c)
- any other kind of property other than tangible property;
but does not include:
- (d)
- a right arising under a contract of insurance; or
- (e)
- a lease or licence in respect of real property or tangible property.
'property benefit' means a benefit referred to in section 40, but does not include a benefit that is a benefit by virtue of a provision of Subdivision A of Divisions 2 to 10 (inclusive) of Part III.
'property fringe benefit' means a fringe benefit that is a property benefit.
The term 'benefit' is defined in subsection 136(1) of the FBTAA as including:
any right (including a right in relation to, and an interest in, real or personal property), privilege, service or facility.
A gift card in the circumstances described confers rights on the bearer, being the merchant's promise to provide goods or services up to the stored value on the gift card. When the employer gives a gift card to the employee, the rights conferred are 'benefits' under subsection 136(1) of the FBTAA.
Subsection 136(1) of the FBTAA defines 'provide', in relation to property, to mean dispose of (whether by sale, gift, declaration of trust or otherwise) the beneficial interest in property or the legal ownership of property.
The rights that exist as a bearer of a stored value gift card, which allows the bearer to receive goods or services up to the stored value, are property. The benefit is a property benefit. The employer 'provided' the benefit when the gift card was given to the employee.
As the property benefit was provided as a reward for services performed it is a 'property fringe benefit' as defined in subsection 136(1) of the FBTAA.
The concessional valuation for 'in-house property fringe benefits', as defined in subsection 136(1) of the FBTAA, is limited to benefits in respect of 'tangible property'. That is:
in-house property fringe benefit, in relation to an employer, means a property fringe benefit in relation to the employer in respect of
tangible
property.... (emphasis added)
As stated above, 'property' means 'intangible property' and 'tangible property'. Tangible property means goods, animals, gas and electricity.
'Goods' is not a defined term in the FBTAA and therefore it takes on its ordinary meaning.
The Macquarie Dictionary [Online], viewed 17 October 2017, www.macquariedictionary.com.au defines the term 'goods' relevantly as:
1.
possessions, especially movable effects or personal chattels.
2.
articles of trade; wares; merchandise, especially that which is transported by land.
The benefit the gift card represents, being the employer's promise to provide goods or services up to the stored value where redemption occurs before the 12 month expiry date, does not constitute possessions, articles of trade or merchandise and is not 'goods' for the purposes of the FBTAA.
The benefit is property but is not goods or any other form of 'tangible property' as defined in the FBTAA. The benefit is accordingly 'intangible property' as defined in subsection 136(1) of the FBTAA.
As the gift card provided to the employee is not 'tangible property' as defined in the FBTAA, the gift card does not satisfy the definition of 'in-house property fringe benefit' in subsection 136(1) of the FBTAA.
Amendment History
| Date of Amendment | Part | Comment |
|---|---|---|
| 27 October 2017 | Facts and Reasons for Decision | Minor grammatical corrections |
| Reason for Decision | Replace the reference to the Macquarie Dictionary 2014 online edition for the definition of the term 'goods' with the currently viewed online edition of the Macquarie Dictionary. | |
| Reason for Decision | Minor adjustments to omit the definition of the term 'good' and replace it with the definition of the term 'goods', as contained in the current online edition of Macquarie Dictionary. | |
| 17 October 2014 | Reasons for decision | Minor adjustment to the referencing of the definition of benefit in line with the style guide.
Minor changes to the referencing of the definition of good in the Macquarie Dictionary to reference the 2014 online edition. |
Year of income: Year ended 31 March 2011
Legislative References:
Fringe Benefits Tax Assessment Act (1986)
section 40
subsection 136(1)
Keywords
Fringe benefits tax
Fringe benefits
Property fringe benefits
FBT intangible property
FBT tangible property
In-house property fringe benefits
Date reviewed: 23 October 2017
ISSN: 1445 - 2782
| Date: | Version: | |
| 16 June 2010 | Original statement | |
| 17 October 2014 | Updated statement | |
| You are here | 27 October 2017 | Updated statement |