An employer provides each of its employees with a Christmas gift of less than $300 in value. The gifts are distributed at the annual staff Christmas party which also has a value of less than $300 per employee.

It’s the employer’s policy to only provide gifts to employees at Christmas time. Even though each employee is provided with a gift and attends a Christmas party, the gift is considered separately to the Christmas party when applying the minor benefits threshold.

In considering whether the gift is a minor benefit in these circumstances, the value of the benefit to the employee is below the minor benefits threshold of $300. It’s necessary to consider the 5 criteria to determine whether it would be unreasonable to treat the minor benefit as a fringe benefit.

The provision of a Christmas gift to each employee is infrequent but regular (being every Christmas). However, the sum of the value of gifts in this year and all other years, where they are identical or similar benefits, is not considered to be substantial.

The gift to each employee is provided in connection with the Christmas party. However, the total value of the minor benefit and associated benefits in this year, and all other years, is not considered to be substantial.

There would be no difficulties in determining the value of the benefit and the benefit was not provided to assist each employee deal with an unexpected event. On the facts, it’s not wholly or principally a reward for services.

Considering the 5 criteria, the employer could decide it would be unreasonable to treat the benefit as a fringe benefit. For this reason, the gift provided to each employee is an exempt minor benefit.