How to get up to $1,200 out of your company (without extra tax)
Do you want a $1,200 write-off each year, just for you?
If you run your business through a company, there’s a small but useful opportunity within the Fringe Benefit Tax (FBT) rules that a lot of business owners don’t realise they can use.
We’ve done a quick video on this below, and we’ll break it down in plain English here too.
How the $1,200 FBT exemption works
If you operate through a company, you can provide non-cash benefits (like vouchers or gifts) to employees — including yourself as a shareholder-employee — without paying FBT, up to certain limits.
The key thresholds are:
$300 per employee, per quarter
$1,200 per employee, per year
$22,500 total across all employees per year
These fall under what Inland Revenue calls “unclassified benefits” — things like:
Gift vouchers
Flowers or gifts
Event tickets
Small perks or personal expenses paid by the business
As long as you stay within all of these limits, no FBT is payable.
Important: these limits are “all or nothing”. If you go even slightly over the $300 quarterly limit, FBT applies to the full amount — not just the excess.
What this actually applies to
This strategy is specifically for:
Companies (and shareholder-employees)
It does not apply in the same way to:
Sole traders or partnerships — these don’t use FBT for owners
Cash payments — these are always taxed through PAYE
What about sole traders and partnerships?
If you’re a sole trader or in a partnership, you don’t pay FBT on benefits to yourself.
Instead, you need to apportion expenses between business and private use.
For example:
Vehicles → logbook and business-use %
Phone/internet → estimate private portion
Other costs → only claim the business share
You’ll also need to adjust for GST on the private portion.
So unfortunately, you can’t replicate the “$1,200” opportunity in the same way.
And trusts?
Trusts are generally treated similar to companies for FBT when providing benefits to employees (including working beneficiaries).
However, the treatment depends on why the benefit is being provided:
If it’s tied to employment → FBT may apply
If it’s a beneficiary distribution → different tax rules apply
Because of this, trusts don’t always neatly fit into the “$1,200” strategy — so it’s worth getting advice before applying it.
One key thing: cash doesn’t count
You can’t take cash instead of a voucher and treat it the same way.
Cash = salary/wages → PAYE applies
Non-cash benefits = FBT rules apply
Also, to ensure deductibility, the company should purchase the voucher or benefit directly.
Final thoughts
This is a simple but effective way for company owners to extract a small amount of value each year in a tax-efficient way — as long as the rules are followed carefully.
It’s not huge, but it’s one of those small wins that add up over time.
It’s important that we are clear - this strategy:
Applies to companies (including shareholder-employees)
Has strict thresholds that must not be exceeded
Does not apply in the same way to sole traders or partnerships
For more detail, you can refer to the Inland Revenue Department guide: IR409 Fringe Benefit Tax Guide.
This is general information only and does not take into account your specific circumstances. Please reach out to Prosper Business for advice tailored to your situation.