Long Service Awards and FBT: What Australian Employers Need to Know

A long service award can be exempt from fringe benefits tax in Australia if it recognises at least 15 years of service and its value stays within a threshold of $1,000 for 15 years, plus $100 for each additional year of service. The exemption is for non-cash awards. Cash is salary or wages, so it never qualifies. Go one dollar over the threshold and, on the professional guidance available, the whole award becomes taxable — not just the excess.

The figures, and exactly where they come from

Every number in this guide is from a named source, checked on 30 July 2026.

• $1,000 at 15 years, $100 for each additional year. These thresholds were announced by the Australian Government in the 2004–05 Budget: "The current exemption thresholds will be doubled, from $500 to $1,000 for 15 years of service, and from $50 to $100 for each additional year of service," applying from 1 April 2005 (Treasury Ministers media release, 11 May 2004).
• The rule lives in section 58Q of the Fringe Benefits Tax Assessment Act 1986, headed "Exempt benefits—long service awards".
• The threshold formula. TaxEd states the exempt limit as $1,000 + ($100 × (RLS − 15)), where RLS is the number of whole years of recognised long service (TaxEd, FBT Q&A – Gifts to long serving employees).
• 15 years is the entry gate. A long service award benefit is "a benefit provided to an employee in, or in respect of, a year of tax solely by way of an award to recognise service by the employee to the employer of at least 15 years" (TaxEd, FBT Q&A – Provision of gifts to long serving employees).
• Cash is not eligible. "A payment in cash form would simply be considered salary or wages" (TaxEd). The ATO's own guidance confirms salary and wages are not fringe benefits at all (ATO, How fringe benefits tax works).
• Exceeding the threshold kills the whole exemption. "If the award's value exceeds the specified maximum, no part of the award is exempt from FBT" (Bristax, Exempt Fringe Benefits). Brisbane firm CTBS says the same thing independently: "If this amount is exceeded there is no FBT exemption on any of the award/gift" (CTBS, FBT Exemptions).
• The FBT rate is 47% for the FBT year ending 31 March 2026, with a type 1 gross-up rate of 2.0802 and type 2 of 1.8868 — unchanged from the prior year (ATO, FBT rates and thresholds for 2026).

One limitation, stated plainly. The full text of section 58Q could not be retrieved during research on 30 July 2026: both AustLII and the ATO legal database returned 403 errors. The threshold figures above are confirmed against a primary Australian Government source — Treasury's own announcement of the change — and against four independent Australian tax practitioners who state the same numbers. That is strong agreement, but it is not the statute in front of you. Have your accountant read section 58Q for your specific facts.

Is a long service award exempt from FBT in Australia?

Yes, subject to three conditions that all have to be met. TaxEd sets them out as: a long service award benefit is provided to an employee; the award is for a recognised long service period; and the notional taxable value of the award does not exceed the threshold.

Read that in order, because the conditions are sequential. If the thing you are giving is not a "long service award benefit", nothing else matters. If it is, but the employee has 12 years of service, the exemption is not available. If both are satisfied, the only remaining question is the number on the invoice.

What counts as a "long service award benefit"?

An award given solely to recognise the employee's service to the employer, where that service is at least 15 years. The word doing the work is solely. A piece handed over at a service milestone qualifies. The same piece handed over as a performance bonus, a retention incentive or part of a remuneration package is a different thing wearing the same shape.

The award itself is usually a property fringe benefit, because it is goods. The ATO defines property for FBT purposes to include "goods, such as items of clothing or a television" (ATO, Property fringe benefits). An engraved trophy, plaque or presentation piece is goods. So is a watch, a piece of furniture or a framed certificate.

Does the FBT exemption cover cash or a gift card?

This is where employers get it wrong, and the two halves of the question have different answers.

Cash cannot be an FBT-exempt long service award. Ever. A cash payment to an employee is salary or wages. The ATO lists "salary and wages" as one of the things that is explicitly not a fringe benefit, which means the FBT exemption for long service awards has nothing to attach to. A $1,000 cash long service payment is assessable income to the employee, subject to PAYG withholding, and very likely counted for superannuation guarantee purposes. It is not tax-free at $1,000. It is not tax-free at all.

Gift cards and vouchers are non-cash, but they are not the safe option people assume. A face value voucher is not cash, so it is capable of being a fringe benefit rather than salary. Practitioner guidance commonly treats gift cards under the separate minor benefits exemption, which requires a notional taxable value of less than $300 and that it be unreasonable to treat the benefit as a fringe benefit (ATO, Minor benefits exemption). That is a $300 ceiling, not a $1,000 one.

Gift cards also cost you the GST credit. The ATO's rule on face value vouchers is that "the sale of a face value voucher for an amount not exceeding its face value is not a taxable supply", and GST is accounted for only on redemption (ATO, GST and vouchers). No GST on the purchase means no input tax credit, which pushes the benefit into the type 2 gross-up of 1.8868 rather than type 1.

What is the FBT-exempt threshold at each service milestone?

The threshold is a function of years, so it is arithmetic once you know the rule. RLS is whole years of recognised long service.

Two things to note before you use that table as a budget. The threshold is a ceiling on the notional taxable value of the award, not a suggested spend. And where an employee has already received a long service award, the headroom for the next one is reduced — see the section below on second awards.

Whether the value tested against the threshold is GST-inclusive or GST-exclusive is a point to confirm with your accountant. FBT taxable values are generally GST-inclusive, but this specific interaction was not verifiable against a primary ATO source at the time of writing.

What happens if the award costs more than the threshold?

You lose the exemption on the whole award, not on the excess. Both Bristax and CTBS state this independently and in almost the same words. There is no partial relief and no apportionment.

The consequence is worth seeing as a number. Take a 15-year award with a notional taxable value of $2,000, where the threshold is $1,000. The exemption fails entirely, so the full $2,000 is a fringe benefit. Grossed up at the type 1 rate of 2.0802 and taxed at 47%, the FBT is $1,955 — computed from the ATO's published 2026 rates. You spent $2,000 on a recognition piece and generated close to another $2,000 in tax.

Now take the same employee at 20 years, where the threshold is $1,500. A $1,400 award is exempt. A $1,600 award produces roughly $1,564 in FBT. The difference between those two decisions is $200 of spend and about $1,564 of tax.

That cliff edge is the single strongest argument for asking a supplier for a firm per-piece price in writing before you commit. If your quote lands within $100 of a threshold, you do not have a pricing question, you have a tax question. What custom corporate awards cost in Australia sets out what actually moves a quote.

How are milestones under 15 years treated?

Section 58Q does not reach them. A 5-year or 10-year award is not a long service award benefit for FBT purposes, because the definition requires at least 15 years of service.

That does not make a 10-year award impossible, it makes it a different exercise. The usual route is the minor benefits exemption: a notional taxable value of less than $300, and it must be unreasonable to treat the benefit as a fringe benefit. The ATO lists five things to weigh in deciding whether it is unreasonable — the frequency and regularity of the benefit, the total notional taxable value of identical or similar benefits, the likely total of associated benefits, the practical difficulty of valuing it, and the circumstances in which it was provided.

The practical read for an HR or finance team: a distinct, infrequent piece at a 10-year milestone, under $300, is the shape the minor benefits exemption is built for. A $250 gift repeated every quarter to the same people is not, because frequency and regularity count against you. And if you run milestones at 5, 10, 15 and 20 years, you are running two different tax treatments in one programme — under-15 milestones under the minor benefits rules, 15-plus under section 58Q. Design the programme knowing that, rather than discovering it in an FBT return.

Does the threshold reset for a second award?

No. Treat it as one allowance across a career, not a fresh $1,000 every time.

CTBS describes it as employers being able to provide further benefits after the initial award and remain exempt, provided "the total benefits provided does not amount to more that the 15 year $1,000 plus $100 for each additional year of service". Bristax frames the same point from the other direction: where an employee has previously received a long service award, the maximum for subsequent awards is set by the years beyond those already recognised.

So an employee who received a $1,000 piece at 15 years has used the base allowance. At 20 years, the total allowance is $1,500, of which $1,000 is spent, leaving about $500 of headroom. This is the most common place a well-intentioned programme fails, and it fails years after the decision was made, in a different team's spreadsheet.

What about GST and income tax deductibility?

Briefly, because this is your accountant's territory rather than mine.

What records do you need to keep?

Enough to prove the exemption you claimed. The ATO requires records that "show how you calculated the taxable value of benefits" and "support any fringe benefits tax (FBT) exemptions or concessions you used", kept for 5 years from the date you lodge your FBT return, in English, and in a readily accessible format if held electronically (ATO, Record keeping for FBT).

For a long service award programme that means four things on file per recipient: the supplier invoice showing the value of the piece, the employee's start date and years of service, a note of what the award recognised, and a record of any earlier long service award that has already used part of the allowance. That last one is the one nobody keeps, and it is the one that matters most a decade later.

What this means when you choose the actual award

The exemption is built around a non-cash award given for service. A physical engraved piece is squarely inside that category — it is goods, it is not salary, it is given at a milestone, and its value is a number on an invoice you can hold against a threshold before you order. That is the whole of the commercial point, and it is a smaller point than the tax rules above.

Bloom Cycle makes recognition pieces in Brisbane from reclaimed Australian timber, and we do not publish prices, so the practical step is a quote with a firm per-piece figure you can check against your threshold. If you also want the wording right, years of service award wording covers the citation itself, and physical or digital recognition is an honest comparison of when an object beats a points balance.

This has been general information, not tax advice. Thresholds, rates and the operation of section 58Q depend on your facts, your entity and your programme design. Confirm your position with your accountant or the ATO before you commit budget.