Gifts to clients are usually deductible as a business expense. Gifts to employees are the ones that raise Fringe Benefits Tax questions. That distinction settles most of the uncertainty that holds up a gifting budget, and it is why a $45 bottle sent to a customer and the same bottle handed to a staff member can sit in different places on your return.
This article sets out how the Australian Taxation Office treats these gifts, what the minor benefit exemption does, when a bottle of wine becomes entertainment, and what you need on file. Every figure is taken from ato.gov.au and dated so you can check it. This is general information, not tax advice, and your accountant should confirm how it applies to your business.
Are corporate wine gifts tax deductible in Australia?
Gifts to clients are generally deductible. Taxation Determination TD 2016/14, a legally binding public ruling, states that a business is entitled to a deduction under section 8-1 of the Income Tax Assessment Act 1997 for a gift to a former or current client made for the purpose of producing future assessable income. The ruling’s own worked example is a bottle of champagne sent to a client.
Two things can take that deduction away. The outgoing is not deductible where it is of a capital nature, or where another part of the tax law blocks it. The ruling names the provision of entertainment as one of those blockers, which is covered below.
It also draws a line at personal gifts. Its second example involves a business owner giving a bottle to his brother, outside his normal pattern of client gifts. That gift is private in character and no deduction is available. The test is for business purposes, not the item.
Client gifts vs employee gifts: why the tax treatment differs
Fringe Benefits Tax applies to benefits an employer provides to employees and their associates. Clients are not employees. The ATO states this plainly in its entertainment guidance for business: there is no FBT on benefits provided to clients.
So a client gift carries one question, which is deductibility. An employee gift carries three: the FBT position, the deduction, and the GST credit. All three are linked through whether the gift counts as entertainment.
The practical consequence is that client and staff recipients need separating on the paperwork from the start. Working out at year end which of 55 bottles went where is harder than recording it when you order.
What is the FBT minor benefit exemption and how does the threshold work?
The minor benefit exemption takes small, occasional benefits outside the FBT system. The ATO sets two tests and a benefit must pass both. First, the notional taxable value must be less than $300. Second, it must be unreasonable to treat the benefit as a fringe benefit. That $300 figure is currently on the ATO minor benefits exemption page as at 17 September 2026.
The second test is the one that gets skipped. The ATO lists five criteria, and the first is the frequency and regularity of the benefit. The more often you provide it, the less likely the exemption applies. The ATO’s own example is an employer who takes two staff to lunch every Friday at $45 a head. Each lunch is well under $300, but because it happens weekly, the exemption does not apply.
Three points on the threshold. It is less than $300, so a benefit valued at exactly $300 does not qualify. It applies to each benefit given to each employee, not to your order total. And it is not a tax-free allowance, so once a benefit crosses the line the whole value is subject to FBT, not just the amount above $300.
For scale, the ATO’s FBT rate is 47% and the Type 1 gross-up rate, which applies where a GST credit is available, is 2.0802. A benefit with a taxable value of $350 grossed up and taxed at those rates produces roughly $342 in FBT.
When does a wine gift count as entertainment?
A gift of wine given to take away is generally treated as a non-entertainment gift. Wine poured and consumed at a company function is entertainment. The same bottle can land either side of that line depending on the circumstances.
Taxation Ruling TR 97/17 is the Commissioner’s ruling on entertainment by way of food or drink. It sets out four factors: why the food or drink is provided, what is provided, when, and where. The ruling treats why and what as the more important two. This is a purpose test rather than a checklist, which is why the setting matters more than the product.
The ATO has not published a worked example dealing specifically with a bottle of wine given as a gift, so the classification of any particular gift is a question of fact for your accountant. It does publish a clear picture of the function end of the range: its Christmas lunch example treats the food and drink as entertainment, because the purpose of the function is for people to enjoy themselves.
For gift occasions rather than tax mechanics, our guide to branded wine gift ideas for corporate gifting covers the situations these gifts suit.
Can you claim GST credits on a corporate wine gift?
A GST-registered business can generally claim the GST credit on a non-entertainment gift, for both client and staff recipients. Where a gift is entertainment and no FBT is payable on it, the deduction and the GST credit are usually lost together.
The ATO’s planning day example makes that visible. An elaborate lunch is entertainment and is exempt from FBT as a minor benefit, so the employer cannot claim a deduction or GST credits for it. The morning and afternoon teas at the same event are not entertainment, so they remain deductible.
Wine Design pricing includes artwork, corporate labelling and GST, so the GST component appears on the invoice rather than being added later. On a $2,475 order, the GST component is $225. Our corporate product list shows current pricing on the same basis.
What records do you need to keep?
Keep the tax invoice, record who received each gift, and note the business relationship and the occasion. Do it at the time of the order. business.gov.au requires records of all business expenses and of GST, and most business records must be kept for five years from when you got the record or completed the transaction, whichever is later.
Four things are worth capturing against the invoice:
- the recipient list, split between clients and employees
- the business relationship for each client recipient
- the occasion and date
- the per-unit value, since the minor benefit test applies per benefit
The order process produces most of this. Our guide to what goes into producing a branded wine gift walks through the invoicing and delivery steps.
Worked example: gifting branded wine to 40 clients and 15 staff
Take an order of 55 bottles at $45 each including GST. Forty go to clients, fifteen to employees as an end of year thank you. The total is $2,475 including GST, and the same purchase is treated two different ways.
| 40 client bottles | 15 employee bottles | |
| Value | $1,800 including GST | $675 including GST |
| FBT | No FBT applies to benefits provided to clients | Each benefit is $45, under $300. Exemption likely if given once a year and not regularly |
| Deduction | Generally deductible under TD 2016/14 where given for a business purpose | Generally deductible as a non-entertainment staff gift |
| GST credit | $163.64 | $61.36 |
The employee column turns on the frequency test, not the dollar figure. Fifteen bottles at $45 does not create a $675 problem, because the $300 threshold applies to each employee’s bottle separately. Send a bottle to those fifteen staff every quarter and the regularity would put the exemption in doubt, even though each bottle stayed at $45.
Our post on wine gift ideas to thank a staff member covers the employee side.
Common mistakes businesses make with gift tax treatment
Assuming every gift is deductible. Client gifts are deductible where there is a business purpose. Gifts that are private in character, or that amount to entertainment, are not.
Treating a regular gift as infrequent. A quarterly or monthly gift to the same employee is not occasional, whatever it costs. Frequency is the first criterion the ATO applies.
Reading $300 as a per-order or per-year cap. It is a per-benefit test, and it is not a tax-free allowance, so crossing it exposes the full value. Packaging and freight also form part of what you are providing, so they belong in the value rather than outside the calculation.
Not splitting the recipient list. One invoice covering clients and staff without a breakdown makes the FBT position hard to support later.
Where to get advice specific to your business
Thresholds, rates and rulings change, and the treatment of any gift depends on facts a general article cannot see. This post is general information and is not tax advice. Before committing a gifting budget, have a registered tax agent confirm the treatment for your business and check the current figures on ato.gov.au. Registered agents are listed on the Tax Practitioners Board register.
Once the client and employee split is clear, the tax side is usually less complicated than people expect. When you are ready to look at the product, our corporate labelled wine range covers wine, spirits and water, with artwork, labelling and GST included in the quoted price.
Frequently asked questions
Is there a dollar limit on client gifts in Australia?
No. The minor benefit exemption and its $300 threshold apply to FBT, and FBT does not apply to client gifts. A client gift is assessed on business purpose and on whether it amounts to entertainment, not against a dollar cap.
Does the $300 threshold include GST?
The test applies to the notional taxable value of the benefit, which is the value it would have if it were taxable. Because that valuation depends on the type of benefit, confirm the figure with your accountant rather than assuming the GST-inclusive price is the number being tested.
Do I pay FBT on a wine gift to a contractor?
FBT applies to employees and their associates, so a genuine contractor is outside it. Employee or contractor status for tax purposes depends on the working arrangement rather than the label on the invoice, so it is worth checking.
When does the FBT year end?
The FBT year runs from 1 April to 31 March, which differs from the income tax year. A gift given in December falls into the FBT year ending the following 31 March.
Disclaimer: This article is correct at the time of publishing. Information, prices, and regulations can change, so please conduct your own research and review relevant legislation before making decisions based on this content.
